With Christmas and New Year all wrapped up it is time to wave farewell to 2014, a year that saw house prices around the nation rocket, Scotland vote no to independence and a review on Stamp Duty Tax. Now eMoov.co.uk the, leading online estate agent, looks ahead to what 2015 could hold in store for the UK property market.
Founder and CEO of eMoov.co.uk Russell Quirk has provided his predictions for the top five topics around the property market in the coming year.
We think the likely outcome will be a Conservative – Lib Dem coalition once again. If this is the case the Stamp Duty reform will stay and continue to benefit the majority of UK homeowners. If Labour fail to come to power it will lay rest to the sinister implications of a potential mansion tax and further punishment of Central London in particular. Until then it may be an uneasy wait for those looking to spend over £2million on a new property and this uncertainty may further cool demand in an already declining market in the capital.
This said with only 34% of the British public turning out to vote in 2014 according to UK Political Info, it is unlikely that the forthcoming election will play on their minds too much. As a result of this disengagement with the political class the mainstream market could see little change.
Interest rates are going to go up and we are surprised that they haven’t done so already. The Governor of the Bank of England Mark Carney previously claimed when unemployment dropped below 7% interest rates will rise. Although this happened months ago interest rates have continued to remain at an all-time low.
Our suspicion is that Mr Carney is providing the government with a helping hand by holding them so low and over the course of this year they will increase to around 1.5%. This is still historically low but when added to the current mortgage rates of 4% it could increase the monthly cost of a mortgage by as much as 25%. A significant increase for the average Joe.
Let’s not be deceived by the perception that the UK as a whole has followed the London property market over the past couple of years. There are significant areas of the country, particularly the North East, that have hardly risen what so ever.
The major concern is that if the market continues to cool across the nation, having already done so since August according to the Office for National Statistics, it will inevitably lead to a fall in house prices in the country’s most sensitive areas. Highlighting the danger of applying a generic percentage forecast across the whole of the country rather than treating it as the several different markets it is. Each of these markets can act in very contrasting ways and the approach needs to be tailored to each these, not to the UK as a whole.
Overall eMoov remains bullish about the property market on a long term basis as there is always going to be more demand than supply. eMoov’s Property Hotspot Index for 2014 shows that demand over the course of the year actually dropped by 8% nationally, 31 out of 100 of the Hotspots showed a healthy increase in demand for property. Glasgow enjoyed an increase of 28%, Doncaster by 25%, Shropshire by 19% and Luton by 13% to name but a few.
We predict that 2015 will see the rise and fall of onthemarket.com. Much like the Greek myth of Icarus and the tragic theme of failed ambition they are likely to fly too close to the sun, too quickly and plummet to their end as a result.
Mostly due to their anti-consumer approach to business and their encouragement of member agents to reduce client coverage for selling. On top of this they simply do not have the budget or resources to compete with proper, established portals such as Rightmove and Zoopla.
In the defence of their publically listed businesses we predict a record marketing spends for both Rightmove and Zoopla, so get used to seeing them on your television screen and on advertisements across the country. We also predict the consumer will fight back against onthemarket.com as a result of them limiting their listing to just one of the two major portals. The consumer won’t stand for this and will demand to be listed on both Rightmove and Zoopla, we expect when they aren’t they will simply turn their back on onthemarket.com because they won’t know who they are and won’t care.
Personally we are happy about the exclusion of online agents from onthemarket.com and expect those traditional agents that have also refrained from signing up will feel the same. People already know where to go to find the winning formula to sell their house and we are looking forward to the self-destruction of onthemarket.com boosting our number of listings in the New Year.
Our Property Hotspots Index for demand in the UK shows a significant reduction in demand for London properties over the course of 2014. The capital has seen a decrease of 28% since February and as a result sellers really need to sharpen their pencils when considering what asking price to list their property at. Failure to do so could see their property stagnating on the market for months on end.
Our data showed Westminster has been worse affected, a 42% decline in demand for property means it lies rock bottom with the biggest decline of anywhere in the UK. The Stamp Duty reform is unlikely to remedy this with the average Westminster property price way over the margin at which the new Stamp Duty reform is beneficial. Bexley was the only Borough of London that has seen demand rise with every other Hotspot in the capital on the drop.
In contrast there has been a rise in demand for commuter friendly towns surrounding the capital. More and more commuters have opted to spend more time travelling in order to save on the cost of a property as towns like Guildford, Reading and Brentwood enjoy a rise in demand for property. With developments like Cross Rail resulting in a cut in commuting times to the city, we predict this rise in popularity will continue as many areas of London remain too expensive for the majority of those looking to buy.