Cebr sees house prices easing in 2015

Housing in the UK is expected to become cheaper this year thanks to a cool down in London, according to Cebr.

House prices across Britain will edge down by 0.6 per cent, helped by a 3.3 per cent drop in London, the Centre for Economics and Business Research says in a new forecast.

The London property market, which was the main cause of UK house price increases in recent years, will surprisingly be the one to put the brakes on inflation in the industry in 2015.  There already are early indications of an upcoming price decline, as fewer people are enquiring about potential home purchases and properties remain unsold for longer, Cebr says.

The expected fall is partly the result of a market adjustment after a period of sharp increases (house prices grew by 8.8 per cent in 2014). However, there are also developments both in the UK and globally which will push prices down.

Properties in London have become costlier for foreign nationals as they have broken through the pre-crisis price peaks in US dollar and in euro. Foreign demand for prime real estate in London will also be dampened by worries over the weak economy abroad, especially in Russia.

Housing supply is due to increase and with the Bank of England’s planned interest rate rises by the end of the year, signs of a cool down on the property market in 2015 are mounting.

Two factors will work in the opposite direction – the bounce back in prices after the election in May and the slight price boost the changes to stamp duty will give to the market. Both, however, would not be enough to reverse the trend towards a decline, according to Cebr.