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UK property medium term growth forecast lowered
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
New forecasts indicate that the Government believes that house prices will continue to grow in the medium term, but at a slower rate than previously predicted.
Largely due to changes in lending criteria, the Office for Budget Responsibility predicts that overall, house prices will rise by 34.1% by the opening quarter of 2021. This represents a revision from the last guidance issued in March of this year.[1]
Changes
The Office for Budget Responsibility revealed that alterations to the regulatory environment, coupled with changes in lenders’ behaviour as a result of the Mortgage Market Review as the main reasons for the downgrade in growth forecast.
As a result, the new forecast is 5% lower than it was in March.
Additionally, the Office for Budget Responsibility has also changed its Stamp Duty revenue forecasts. Now, Stamp Duty is predicted to raise £11.5 billion in 2015/16, rising to £17.3 billion in 2019/20. This was in comparison to March’s forecast of £10.4 billion and £18 billion respectively.[1]
Short-term forecasts for Stamp Duty receipts have been altered due to an increase in property transactions at the end of the 2014/15 financial year. The Office for Budget Responsibility expects this trend to continue.
Hot summer?
Experts also predict that the selling market will continue to be busy throughout the summer months. Traditionally, the prime periods for selling property have been in March through to the end of June, with another surge in activity between September and October.
However, data from an investigation by real agent firm Knight Frank suggests that there has been a change in this trend in recent years, with sales continuing through the normally quieter summer period. The firm suggests that the number of properties sold by themselves between June and August 2014.
UK property medium term growth forecast lowered
‘The increase in summer activity is a reflection on a number of factors including the popularity of holidays being taken in the UK and thus being able to see a house more quickly,’ stated Rupert Sweeting, head of Knight Frank Country. He also said that the rise of the internet has allowed holiday makers to,’ browse their tablets and phones whilst relaxing.’[1]
We are seeing this happen again this year principally as the election made many buyers put their decisions on hold until after the result was known. As a result the market is six to eight weeks late. We already have a high level of house bookings going forward this month and in August,’ Sweeting added.[1]
[1] http://www.propertywire.com/news/europe/uk-house-price-forecast-2015071410743.html
