Halifax data indicates the housing market will slow down next year with average price rises of 4% to 6%, which is lower than the current 9.7%. They warn there are increasing complications initially to get on the housing ladder, as well as a growing prospect of an interest rate increase.
Beyond 2016, price rises are set to be roughly in line with income growth and as steady rising interest rates increase the affordability limit on demands.
Housing economist for Halifax, Martin Ellis says “There’s little reason to expect any fundamental shift in the key market drivers in the immediate future. As a result, the substantial imbalance between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016”.
He adds “On average, UK house prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates. Nonetheless, with house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder”.
Generally, the Halifax consider that sales nationally in 2015 are probable to be comparable to 2014’s 1.22 million.
The biggest slowdown will be seen in London along with Mortgage affordability in the capital now being worse than its long run average.
Ellis explains “Cash transactions account for around one-third of all home purchases in England and Wales. There are significant regional variations around the national average with cash sales representing the smallest proportion of total sales in London (27%) and the highest in the south west (40%)”.