Optimism on a better property market rules The New Year

The year that passed gave the positive tidings to be upbeat in the New Year. The forecasts are unanimous there will be better growth and more supply of housing properties.

Property pundits are emphatic that house prices will go up in 2014. A tinge of anxiety also persists on the possible impact of rising interest rates on buy-to-let landlords. The year that passed, 2013, saw a momentum in property sector marked by rising prices in the band from 3.5 to 6 per cent if all the indices are to be believed.

Hope is that 2014 will be positive yet different from the previous year. Despite the commonality of soaring house prices the silver lining will be a drastic improvement in the supply side with more housing stocks in the market.

Growth Projections

Strutt & Parker are on record that price growth in 2014 will be sensitive to the prevailing political expectations and 2015 can be the same.

The estimate of the National Institute of Economic and Social Research (NIESR) is that house prices will go up by 5 per cent in 2014. For Hamptons the figure is 6 per cent, whereas Savills is a bit liberal at 6.5 per cent.

The long forecast of five-year and beyond sees 2016 as a crunch time in the property market. It sees a housing bubble in the making, but refrains from calling a crash outright. The expected rise in interest rates may hamper affordability and hit price growth to 3 or 4 per cent to be in pace with inflation. In such a scenario even London property prices will slow down. Savills is forecasting price rise of 8.5 per cent in 2014 and then prices sliding to just 2 per cent in 2017.

Buy-to-let investors

Even if the forecasts are accurate landlords still have reasons to be happy as they have seen crashing property values by at least 25 per cent, since 2007.

Forecasts suggest price surge of 20-30 per cent depending on the market value of an area. The interest rates are set to go up from 2015/2016 and the property forecast can help landlords to work out what is best and exit before interest rates surge or hang on to manage higher mortgage in return for capital growth.

It is not mere price growth that is making good news. Those looking into buy-to-let for the first time or seasoned landlords planning to expand, news of more housing stock becoming available can be a matter of cheer. That is why Hampton says a 9 per cent increase in sales is in cards while Savills suggests a 15 per cent jump in sales will be inevitable.

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