Several independent forecasters have begun to predict that house prices could rise by as much as 6% during the first quarter of 2015, although there appears to be a consensus that the market will begin to cool prior to the General Election which will be held in May.
What Will the Post-Election Landscape Look Like?
Many of the post-election forecasts are chequered by uncertainty. Several still believe that we will see a drop in the second half of the year; especially if the Labour Party wins power, but this remains unclear at present, and it is unlikely we will be able to predict accurately until after the election. Of course, a General Election will always bring uncertainty in the market, and this shouldn’t be considered as anything new, it is merely something to be wary of.
Interest Rate Hikes Could Affect New Home Owners and Prompt a Slowdown
House prices alone, however are not the only thing for home owners, buyers and sellers to be wary of in the new year, as interest rates are also set to rise. For many, this will have little to no impact, but for first time buyers, the impact could be considerable, as these are traditionally the home owners (or prospective home owners) who spend the largest percentage of their income on home costs. If interest rates do rise significantly, then it could help shape the aforementioned market slowdown in the second half of the year.
Scotland’s Tax Change
Scotland properties saw a 1% average price rise during the last quarter, meaning they ended the year 2.1% up. Many attribute this to the referendum result, with a ‘No’ vote fuelling buyer demand.
In addition to this, the LBTT rates published in October show that buying once taxes have been raised in April will be far more expensive. After the change comes into effect in April, any sales above £254,000 will incur a higher rate of tax compared with the current stamp duty structure, meaning that the price of moving house could be significantly higher.
To conclude, the General Election, hike in interest rates and changes to Scotland’s tax laws mean that 2015 could be a volatile year in the housing market, with many forecasters saying we could see an early price rise because of this.