House prices in England and Wales look set to end the year up 8.5 per cent and by 5.5 per cent in 2015, says Hamptons International.
In its updated forecast, the leading residential agent warned that the pace of growth is already beginning to soften as sentiment has weakened, affordability constraints start to bite and both buyers and sellers’ expectations of future price growth moderate.
In addition, the approaching general election is adding to caution in some sectors of the market and this, combined with rising interest rates, is likely to mean weaker price growth throughout 2015.
The research found:
- There is still a clear divide between the South of England and elsewhere in the country with price growth expected to remain more subdued in the North and Midlands.
- Prices in Greater London are forecast to rise by 15.5 per cent in 2014 and 3 per cent in 2015 while in the South they are expected to grow 8 per cent this year and 6.5 per cent next year.
- 2015 should see a continuing slow down in price growth across the country as interest rates rise, expectations of future price gains adjust and affordability constraints bite.
- Average prices in England and Wales are expected to rise by 8.5 per cent in 2014 and 5.5 per cent in 2015.
Commenting on the figures Fionnuala Earley, director of Residential Research at Hamptons International, said: “The rate of house price growth so far in 2014 has been a little higher than expected.
"Prices have been driven largely by London and the South East, but a change in sentiment over the rate of future price growth has affected the whole of the country and we expect that to result in a moderation in house price growth next year.
“Despite a strengthening economy, there is now evidence of a change in sentiment across the country brought about by increasingly strong messages from the Bank of England culminating in the implementation of more stringent affordability regulations.
“The overall message for transactions is that the pace of increase seen earlier in the recovery is unlikely to continue.”