House price forecasts – do they represent a diminishing value…..?
A year ago, our blog ‘what value are house price forecasts’ followed an ebullient rash of predictions from the key national agencies. We are not surprised to find that their predictions for 2015 are far more muted – though few analyse the factors that underpin demand on the part of country house searchers…..
Agent For 2014 For 2015
Strutt & Parker + 4% + 2%
Chesterton Humberts + 5.4% –
Hamptons International + 7% + 4%
Knight Frank + 7.6% + 3.5%
Savills + 7% + 3%
(for prime markets) ` + 4%/5% + 1%
The few agents to forecast price movement over the next five years now vary from +18% to +26% – whereas, a year ago, they spread from +22% to +33%.
Whilst most pundits quote the General Election as the principle reason behind such caution, we are all too aware of a number of other factors likely to affect the strength of the prime markets over coming years
– Mortgages
It is generally accepted that interest rates will rise – just uncertainty as to when. The consequent tightening of loan criteria by lenders has tangibly undermined purchasing budgets (quite dramatically, for those who currently enjoy interest-only mortgages – as these are now largely unavailable)
– Stamp Duty Land Tax
There is no question that the changes made by the Chancellor in his Autumn statement have been welcomed – even if they have led to significant increases for those purchasing above £1 million (who will, predictably, factor these additional costs into their negotiations).
– School Fees
The TES reported last August that school fees have been rising four times faster than earnings (Lloyds Bank quote a 21% increase over the last five years – not surprisingly, Lloyds also report that the number of pupils in private schools has decreased by 3% over the same period). There is no question that these increases have affected the house purchasing budgets of buyers moving from London to the countryside.
– Lifestyle
The shift of demand from country to town living has become increasingly evident over the past couple of years. Whether this reflects desire for the amenity of leisure amenities (such as restaurants, gyms, shops and coffee houses) ‘on the doorstep’ – or the predictable savings in running costs of a town house – is difficult to tell. Certainly, towns with good grant aided or grammar schools are a major appeal.