In 2015 UK regions outside of London and the South East of England will catch up on the property price growth that has topped the market this year, according to agents.
The National Association of Estate Agents (NAEA) predicts that in 2015 London and the South East will show slower growth in terms of price.
With stamp duty reforms now in place, agents are hoping for greater supply in the market nationwide as there’s more encouragement for people to buy and sell houses. ‘Areas outside London and the South East, where the market has been slow in terms of volume and price, will hopefully catch up with London and the South East in the next year,’ said Mark Hayward, NAEA managing director.
He pointed out that currently supply in terms of construction is too low to be able to meet housing market demands. ‘Although the number of new homes being built has risen, and the three main political parties have created large new build targets, the lack of capacity within the market means that the gap between supply and demand won’t close and we currently don’t have the resources to respond to the problem,’ he added.
Agents also believe that the general election will cause uncertainty, whichever party is likely to come in to power and with the housing market being based solely on sentiment, any uncertainty may result in a temporary lull. However, Hayward said the general feeling is that this will have long lasting implications on the market.
He also mentioned the expected interest rate rise next year. ‘At present it’s anticipated to rise in the latter part of 2015, and the Bank of England feels this will have little effect on current mortgage holders and first time buyers. However, our research among NAEA members suggests the impending rate rise will influence demand, with 70% of agents already reporting signs of demand dropping. It is likely that the imminent rate rise will continue to affect demand, as well as affordability,’ added Hayward.
David Cox, managing director of the Association of Residential Letting Agents (ARLA), explained that supply is also low in the private rented sector. ‘Simply put, we need more houses. Demand continues to outstrip supply. As new homes come on to the market at one end from both foreign investors and landlords in London and South East who are buying up portfolios in the north of the country we’re also seeing accidental landlords leaving the sector at the other end,’ he said.
‘However, even with some increase in supply during 2015, we still expect to see growth in rental prices of around 2% to 3%,’ he added.
Another major issue is the Immigration Act requirements on landlords which are being trialled in the West Midlands and expected to be rolled out more widely in 2015. Under the new Act, letting agents will be required to make ID checks to establish the immigration status of all prospective adult occupiers before a residential tenancy agreement is granted.
He also believes that the election will have an impact on the rental market, particularly when it comes to regulation of the sector. ‘ARLA would like to see a fully regulated industry to build a better, stronger private rented sector, which will help to eradicate the rogue agents who tarnish our industry. Labour is pro regulation but has also pledged to introduce three-year tenancy agreements with strict rules which will make it more difficult to evict tenants. This could see landlords pull out of the market,’ said Cox.
‘Whatever the outcome of the election, considerable change is likely over the next five years. It could be a make or break time for the sector,’ he concluded.