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Helpful Advice

2016 Property Predictions

2016 Property Predictions

By Justin Burns

No one has a crystal ball when it comes to predicting the property market over the coming year but it is possible to gauge opinion and look at the overall financial state of the country in order to try and suggest which way prices will swing over the next 12 months.

There seems to a general opinion that prices will rise during 2016, although to a far lesser extent than they have in previous years. A poll by Reuters of economists revealed that the predicted average price rise for next year is 4.3%, while Halifax has forecast a price rise of between 4–6%. The Royal Institution of Chartered Surveyors (RICS) is also predicting a price rise similar to other experts, with the organisation suggesting that prices will rise, on average, 4.5% annually over the next five years.

While all these figures are significantly lower than actual percentage rises over previous years, there is bound to be a knock-on effect of extremely low inflation. Plus, the continued issues surrounding lack of supply could have an additional impact on these figures.

The figures are representative for the whole of the UK so there will obviously be a great deal of fluctuation between regions. And London tends to follow its own rules, so while it might generally go with the trends across the rest of the UK, there are always anomalies, as the property market in the capital tends to move at a greater pace and often with greater figures involved and more issues relating to supply and demand to contend with. All these factors tend to push property rises up further in London when compared to other parts of the country.

First-time buyers won’t welcome the news of further increases. Even though the percentage rise is predicted to be relatively modest when compared to the last couple of years, any rise pushes this sector of the marketplace further out of the picture, as they need to save bigger deposits in order to secure a home. While the government is aiming to get one million new homes built by 2020 to try and alleviate the housing crisis, it remains to be seen whether this target is achievable and what level of impact it will have on the growing pressure on the housing market. With a severe shortage of affordable housing across the country, it’s important that new housing addresses this problem.

However, as London faces one of the greatest housing shortages but has some of the most expensive land prices, it is going to take a great deal of careful planning with local authorities and house builders to ensure the need is met over the coming years.