London property prices set to fall in 2015

If you're looking to put down roots in London, you could benefit from putting off on purchasing a property and rent a home instead. This is because house prices across the capital are set to fall throughout 2015, according to new information from the Centre for Economics and Business Research (CEBR). 

The centre has suggested that Britain as a whole could see property prices fall throughout the next 12 months, with the largest drop being seen in London. This means that purchasing a new home at the start of the year could leave you out of pocket in the long run as prices start to stabilise following a high level of inflation.

According to the CEBR, prices are likely to be affected by higher interest rates, a fall in the number of foreign buyers, an increase in supply and the May general election. The combination of all of these factors could result in the market going into reverse throughout this year.

It is predicted that prices will see a 0.6 per cent decrease over the next 12 months, marking the first decrease in property prices within London in over five years. The capital is expected to see prices drop by 3.3 per cent, which follows on from 2014's 16.8 per cent increase in property costs.

The CEBR said: “Leading indicators such as fewer new buyer inquiries and properties taking longer to sell already point to falling prices. Even after May, when the elements of political and taxation uncertainty are less of a factor, the CEBR does not expect a strong post-election bounce back.” 

In addition to this, a survey performed by the Bank of England into the latest credit conditions revealed that the final quarter of 2014 saw a marked fall in the demand for mortgages. The number of mortgage approvals for property purchases fell from 58,511 in October to 59,029 in November. This is a drop of 22.9 per cent from January, which saw a 74-month high of 76,611 mortgage approvals.

With this in mind, it could be beneficial for those searching for a home to begin the year by renting so as to wait for market conditions to improve for buyers. This could mean they are able to get a better property at a lower price down the line.

Published 7th January, 2015

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