The main reasons house prices will ‘rise by 25% in the next five years’
With house prices estimated to ‘rise by 25% in the next five years’, buying property now looks set to earn you money. Auction House London takes a look at some of the main reasons house prices look like they may jump by as much as a quarter during the next five years.
The start of 2015 saw a marked increase in new buyer inquiries and by May, house prices rose quicker than the previous few months. Since the general election which resulted in a stable government, numerous economists have predicted that prices will continue to rise.
Reasons for house price inflation include:
The Government Help to Buy scheme where young couples can obtain mortgages with as little as 5% deposits, has undoubtedly had an upward effect, after slowing due to uncertainty about the outcome of the elections.
Low cost mortgages are now available with cheap interest rates; this will certainly contribute to potential sales.
The removal of uncertainty after the general election and the Labour threat to impose a “Mansion tax” and limit the Help to Buy scheme, has led to optimism within the property market, that will see steady rises in property prices.
Reasons for lack of available housing, raising house prices:
Listings are in very short supply, which is pushing up prices to new levels. Supply of potential properties is at the moment very tight, this imbalance has surprisingly had an effect in raising prices. A previously predicted post-election “Supply Bounce” does not appear to have materialised, with London in particular seeing a sharp drop in instructions. Estate agents average numbers is at its lowest level since 1978.
At the higher end, home owners have been deterred from selling due to the December 2014 stamp duty impositions. Property worth more than one and a half million is rare to find on the market at the moment, leading to a “trickling down the ladder effect”
However with anticipated house prices rising by as much as 25% within five years, it is going to be very tough on first time buyers, particularly the young first time purchasers. There is some indication that people are now also holding on to their property in order to be able to pass it on within the family, relatively debt free rather than become involved in re-mortgaging or up sizing.
Levels rising by another 25% over the next five years”, suggests that the government will at some stage consider new measures to try and boost home sales or create new affordable housing, particularly aimed at the first time buyers.
With demand for affordable property constantly outstripping the availability of homes for sale, the rental market is buoyant. However, predicted rent rises averaging almost 3% over the next 12 months are expected. Demand for rental properties will no doubt continue to increase across all parts of the UK during the next few months.
Auction House London continues to bring you up to date information on the latest news and trends in buying and selling property in the U.K.