The property market seems to have been slowing down in recent months, but as the year draws to a close, the question on everyone’s lips is “what will happen next year?” It is thought that house prices will continue to drop next year, and today we’ll look at a few of the reasons for this reduction.
A Strong Pound
2015 is set to be a year with a stronger pound, with the euro expected to weaken. This could affect house prices as in the past. Foreign investors have been attracted to the UK for its weak currency, but, with the strengthening of the pound, investing in the UK will be less attractive, causing house prices to drop.
Expensive Mortgages
In relation to interest rates, mortgages are currently very attractive and affordable. However, with possible higher interest rates, buyers will find themselves unable to afford property as they simply cannot commit to make repayments. This could result in house prices dropping in order to make them more affordable for buyers.
General Election
The next General Election will take place in May 2015, and with the possibility of another hung parliament, there will be a great deal of uncertainty leading up to and in the aftermath of the election, as a new government could alter our current housing policies. With the possibility of housing policies changing, there are a number of factors that could affect property prices. Buyers may decide to hold off on entering the property market until after May, so there could be less of a demand for houses until then.
Mortgage Restrictions
Mark Carney, Governor of the Bank of England, recently stated that house price rises pose a threat to the UK economy. This has resulted in restrictions being imposed on higher mortgages offered by banks. It is thought that these restrictions could become even tighter next year, which could in turn lead to a drop in prices.
Whatever happens, here at Search Mortgage Solutions London we’ll be providing our services as a mortgage broker in London. If you would like more information about any of our services, don’t hesitate to contact us on 0207 554 5685 and a member of our team will be happy to help.