UK house prices seen to dip next year
British property prices will fall in 2015 following a steep rise over this year, according to a leading forecaster the Centre for Economics and Business Research (CEBR).
Researchers predict prices to fall 0.8% year-on-year in 2015, as the Bank of England is widely expected to raise interest rates from a historic low base level of 0.5%.
CEBR said it expected a “correction” rather than a slump to follow a forecast 7.8% growth over 2014, the strongest progression since 2007 and more than double the rate of the previous year.
“Price falls next year will be modest and we shouldn’t be too worried about this, we are not anticipating a crash,” said CEBR head of macroeconomics Scott Corfe. “The market is adjusting after getting ahead of itself at the start of 2014.”
Tougher requirements for buyers to get mortgages and demands for higher deposits would also dampen the market, Corfe said.
Prices will then increase 2.6% year-on-year in 2016, with gains of around 3% in the following years, according to the researchers.
After average house prices reached record highs over the summer, the market is showing signs of slowing with estate agents reporting fewer enquiries and indications of a cool down in London, which has driven growth.
Meanwhile, Bloomberg quoted Business Secretary Vince Cable as saying Britain’s economic growth is being hampered by stalled exports, partly as a result of the high value of sterling.
“Arguably, the pound is overvalued by 10% to 15% on a trade-weighted basis,” Cable told a side meeting at his Liberal Democrat party’s annual conference in Glasgow, Scotland. “This feeds back into monetary policy. It is a significant problem that we can’t directly address.”
Cable’s comments echo those of Bank of England deputy governor Ben Broadbent, who said in an interview in July that it was “quite possible” the pound was 10% overvalued and its strength might have a long-lasting impact on inflation. — Agencies