London has always fuelled the engine of property and economic growth in the UK, and the past 18 months have clearly been no exception. Property prices have soared across the capital, ensuring to capture a market of wealthy and international investors in the process, with an even greater trend filtering into the commuter belt and surrounding regions. With mortgage rates at historic lows, greater accessibility across the market has helped fuel price rises in accordance to the oh-so familiar demand and supply laws of economics.
However, the market still has the potential to create hurdles for would-be buyers looking to take the plunge and purchase a new property in 2016. Increasing price points have undoubtedly saturated the capital, which has resulted in a slight stagnation in London values and spiralling prices further afield. Whereas prices in Boroughs such as Kensington and Chelsea have stalled over the past 2 financial quarters, the likes of Newham and Croydon have witnessed exponential growth.
What to expect from house prices in 2016
Affluent regions grew by just 1% last year compared to the national house price growth of 10%, a trend that has the potential to cause issues for homeowners in higher performance regions. As homeowners elsewhere in the UK are required to evaluate the market and decide whether selling is the best option for them, timing is now as key in property as it is in stock markets. As such, widespread demand for prime capital homes is thought to be unlikely for the 12 months ahead.
With the onset of a global recession towards the end of the year, which could send prices plummeting, many borrowers are continuing to question whether growth has finally peaked in certain regions, or if they should expect more over the next few financial quarters.
Predictions for overall market growth for property in 2016 is still favourable, however, and expected to withstand the threat of a looming global recession and remain prosperous for most. A nationwide house price growth of 7% has been forecast with South East regions leading the way, providing homeowners with the opportunity to place a higher premium on their properties (especially towards the end of the year).
To reiterate, as ever, timing is crucial when planning for the financial year ahead, but there are still many benefits possible for selling your property in the current market climate.
Where to go from here…
Expectations of interest rate rises hold the ability to cool off the property market, with tougher mortgage approvals and creeping rates all thought to affect the capital’s previously booming market.
Despite rumours of interest rate rises amid the introduction of tougher criteria for the buy to let sector, London property remains a relatively safe investment, while the security of sterling and London’s political stability remains an incentive for international buyers. However, when mortgage rates start to increase, the budgets of potential buyers will consequently decrease and the initial asking prices posed by sellers may no longer be reasonable expectations.
Ultimately, our advice for those wishing to move home is to stay ahead of the crowd and do so sooner rather than later, as the future of the property market remains largely speculative.
As far as the natural peaks and troughs of an economic cycle goes – and in the property market’s case especially – the key understanding is that we are currently in a peak. Which of course, once goes up, must come down. It is, however, safe to say that regardless of unfolding events in the near future, prices will peak once more. Although the question of how long that may take, is anyone’s guess.
Whichever option you decide on, we will provide expert advice to help you find the best and most practical solution for you. If you’re a foreign national looking to invest, a homeowner considering your selling options or are simply looking to buy – we have the answers to prepare your property in 2016, ensuring you make the best decision for your circumstances.