House Price Growth Set to Slow Over Coming Year

House price growth is set to slow in the UK with experts predicting housing will see 4pc with the possible rise in interest rates and getting on the housing ladder named as key factors.

While the shortage of housing stock will restrict the number of property transactions in 2016, a forcast by the lender Halifax, they say that property value will still increase inline with income growth.

Halifax’s housing economist, Martin Ellis said;

“There is little reason to expect any fundamental shift in the key market drivers in the immediate future.”

“As a result, the substantial imbalance between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016.”

“On average, UK house prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of house building, and exceptionally low interest rates,’ he explained.”

“Nonetheless, with house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder.”

Interest rates could slow down house price growth

“When the time finally comes for the first rise in official interest rates, the Bank of England is likely to adopt a cautious approach to raising rates due to concerns about households’ ability to make higher repayments on their debts.”

“This ongoing development, combined with the growing prospect of an interest rate rise, should start to put the brakes on house price growth during the course of 2016.”

“A continuing shortage of supply is likely to continue to act as a significant constraint on activity over the coming year.”

“Sales in 2016 are expected to be modestly higher than this year, but to remain well below the peak of 1.6 million in 2006.”

“Levels of housebuilding remain well below those required to keep up with the pace of household formation, but we do expect improvements over the medium term.”

“An upward trend in house building would help to bring demand and supply into better balance, helping to constrain the upward pressure on house prices.”

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