What does the New Year hold for house price trends? Here’s an insight into what some of the experts think…
It’s been an eventful year for the property market. From Help to Buy, to booming house prices, to Capital Gains Tax on foreign investors, the Chancellor’s Autumn Statement and the ongoing debate about house building – it’s certainly been interesting!
However, what’s coming up this year? What kind of house price trends are we likely to see in 2014? It’s a very contentious subject, with some claiming they can’t continue in the same vein, as there’s the danger of a bubble forming. Others say that prices may settle down but they will even out rather than fall. Also, with an election coming up 2015 it’ll be interesting to see if there are further mumblings about Mansion Tax – a subject Deputy Prime Minister Nick Clegg and Shadow Chancellor Ed Balls seem keen on.
So let’s take a look at what’s being predicted by the Knightsbridge estate agents experts in the year ahead:
More of the same
The general view is that next year will bring more of the same for homeowners in terms of house prices increasing. We predict that prime areas such as Chelsea, Mayfair and Belgravia will increase by five percent.
It’s the elephant in the room – when will interest rates rise? At a historic low for nearly five years, they’ve helped many home owners survive the storm during the crisis (although admittedly not so good for savers!) Bank of England governor Mark Carney initially said this year that he wouldn’t even think about rate increases until unemployment reached seven percent – however, with the economy showing signs of recovery, this is likely to happen sooner rather than later. Hence in more recent comments Carney stressed that in fact there was no guarantee that the Bank’s committee would raise them even if unemployment did hit the magic figure. We’ll have to see what 2014 has in store – however, it’s unlikely the Bank would choose to make a drastic move in the build up to the elections in 2015.
Capital Gains Tax
One of the biggest moves this year was Chancellor George Osborne’s introduction of Capital Gains Tax on foreign-owned property. The announcement, although much anticipated, was made in the Autumn Statement. Up until now, overseas investors have managed to escape the levy, with it only being applied to UK citizens at 28 percent. However, in a bid to dampen down the housing market at the top end and of course placate coalition partners the Liberal Democrats, the tax was extended to foreign buyers. It doesn’t actually start to apply until April 2015 and while there is a slight chance that this will have a negative impact on the market, most experts think that prime Central London prices will continue to rise.
There’s been a lot of new developments popping up here there and everywhere. High profile areas include the South Bank and Battersea Power Station. There’s also been the extension of transport hubs such as the Northern Line, to ensure access to the City is very easy. Crossrail hotspots have been popping up everywhere too, from Hammersmith to Central London – which is always a boost for property prices. Another interesting factor is the building of new homes – promising to deliver tens of thousands of new homes for Londoners who need them. Click here to read more about this.
It’s been rumoured for a while now that some members of the government are keen to introduce a Mansion Tax on those with properties worth more than £2 million. We think this is a bad idea as it will likely end up pulling more people into the net than originally intended (as many taxes do). Really, it all depends how the Coalition fares during the next year – Deputy Prime Minister Nick Clegg has indicated he is very keen on the levy – while Prime Minister David Cameron has said the Conservatives are definitely against it. So it’s one to watch during 2014. Read more why we think mansion tax is a bad idea.
Overall, it’s a pretty positive year for property. We’re looking forward to what 2014 has in store for house price trends.