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House prices to fall in 2015

London house prices to decline by 2.6% in 2015 - first decline since the financial crisis in 2009

• New Cebr forecasts show UK house prices to grow by 7.8% this year but fall by 0.8% in 2015.
• The decline in prices will be led by London. Prices in the capital are expected to fall by 2.6% in 2015 as domestic and overseas demand fall back.
• Leading indicators show new buyer enquiries already declining.
• MMR guidance has led to a weaker outlook for mortgage approval numbers. 

New forecasts released by award-winning housing market analysts Cebr – the Centre for Economics and Business Research – show that the UK’s housing market is now at a turning point.

After growing by 7.8% this year, average house prices across the UK will dip by 0.8% in 2015. The reversal of fortunes in the property market will be even more dramatic in London, where the 17.1% growth seen this year will be followed by a 2.6% contraction for next year as a whole. The London housing market will be at its weakest in Q3 2015, when prices will stand 8.5% lower than in Q3 2014.

In the capital, leading indicators already point to price declines, falling new buyer enquiries and properties staying on the market for longer before they sell.  Affordability has become such an issue in London that prospective buyers are starting to baulk at high prices.

Compounding this is a decline in overseas demand. London property prices are now above their pre-crisis peaks in US dollar and euro terms – making London housing less attractive for overseas investors.

In addition, UK property is increasingly looking like a less safe investment. Uncertainty over the next election, some uncertainty about UK governance following the fallout from the Scottish independence referendum and the risk of an uncertain relationship with the EU make the UK appear inherently more unstable than in the past, while the proposed mansion tax raises the prospect of expropriation of wealth in the future – something which will deter overseas investment in the UK.

House price growth is expected to slow across the UK next year. The Mortgage Market Review (MMR) guidance, introduced in April, has led to a weaker outlook for mortgage approval growth as eligibility criteria have become tougher. This will curb demand for property in the short term.

Scott Corfe, Head of Macroeconomics at Cebr and main author of the report, says “Tougher mortgage eligibility criteria, high deposit requirements and concerns about future rate rises are starting to take steam out of the UK housing market.

But the risks should not be exaggerated – the price falls forecast for next year will be modest and we shouldn't be too worried about this – we are not anticipating a crash. The market is adjusting after getting ahead of itself at the start of 2014.”

Douglas McWilliams, Executive Chairman at Cebr, says “the London housing market is being hit by a double whammy of reduced domestic and overseas demand. Sterling appreciation since the start of 2013 means that London property is no longer as attractive an investment as it was a few years ago“

“In addition, fears of a future mansion tax are eroding the UK’s international safe haven status. This will bring down prices at the top end of the capital’s housing market.”

http://www.cebr.com/reports/house-prices-to-fall-in-2015/

An estate agent’s view: Auction decision is to be thought about.

 

The question asked by many newcomers to auctions is ‘How much will you charge to sell my property?’ – a fair enough question but in my experience the wrong place to start.

I receive many calls each week from sellers who are attracted by the speed and certainty that a sale by auction brings - let’s face it, who selling a property wouldn’t see the advantage of a 10% non-refundable deposit, a legally binding contract on the fall of the hammer and a firm completion date?
The decision to go to auction may well be influenced by the circumstances surrounding the sale but the fundamental factor must be the nature of the property in question and its target market.

 

Auctions appeal to builders, investors, developers and cash buyers together with a relatively small group of keen first time buyers who are prepared to compete to secure a place to live.

The “prime candidates” are therefore those properties that need modernisation and in my experience the worse the better, whether an ex-rental house that has seen better days or a house belonging to an ageing relative.

 

I believe passionately that a sale by auction is by far the best way of selling a house of this nature and competition at this week’s auction backs this up. The bidding process is over within four minutes.

 

No best and final offers, no backing out at the last minute, no ‘fingers crossed it will go though’ or last minute re-negotiation
The sale is final on the fall of the hammer.

Many houses on the other hand are just ‘too good’ for auction and the temptation to ‘give it a go’ should be resisted.

 

The key in all of this is to get the right advice. For every property I enter into auction there must be another where I decline instructions and recommend persevering with an estate agent. This is one of the reasons why we have maintained one of the highest success rates in the county. The temptation is always there to fill each month’s catalogue with unsuitable auction lots and take client’s entry fees in the hope of ‘getting lucky’.

 

This is far from professional in approach and Sheffield being the big village it is, you would soon lose the trust of buyers and sellers alike.


 

The answer to the question ‘Last resort or first option?’ is probably ‘yes’ to both, but for an unmodernised house with damp, dry rot, old wiring, overgrown garden and leaking roof the answer is a resounding ABSOLUTELY YES!


 

 Adrian Little has been working in Sheffield for over 30 years, 26 of them with Mark Jenkinson and son where he is a partner and principal auctioneer, overseeing monthly ‘Property with potential’ auctions at Bramall Lane.

 

http://www.southyorkshiretimes.co.uk/news/property-news/an-estate-agent-s-view-auction-decision-is-to-be-thought-about-1-6876888

 

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