House price growth is expected to slow from 2015 when the market will peak; predicts the Economic Research Council’s property experts. The rate of price hikes is forecasted to decline slowly from 2015 onwards, with property prices beginning to plateau from 2019, when the average house price in England and Wales is expected to reach £212k.
All three property economists who spoke at the Economic Research Council’s annual property event on the 11th June predicted that the market’s growth rate will peak in 2015, giving the following reasoning:
Gráinne Gilmore (Knight Frank) comments:
“From April 2015 interest rate rises will start to impact on the rate of price growth as mortgages become more expensive”
James Wyatt (Parthenia) believes that:
“The General Election followed by the aftermath of confronting the reality of trying to reduce the national debt, is the reason why growth rates will peak in 2015.”
Matthew Pointon (Capital Economics) comments:
“Tight market conditions will lead to further house price gains over the next few months and robust economic growth this year and next, alongside a rise in real earnings, will push prices up further in 2015. But house prices are already high in relation to earnings, and as interest rates gradually edge up from the second half of 2015 the pace of gains will slow. Our central forecast is for a long period of stable house prices as earnings catch-up, but a sharper correction – perhaps caused by a faster-than-expected rise in interest rates – is still a risk.”