Without a doubt the UK property market came roaring back (for the most part) in 2013, and 2014 looks to be yet another buoyant year for the UK property market with experts predicting values to increase between 7% and 8%.
London led the way, particularly the prime Central London areas whose values increased on average by 7.5% in 2013. There has been some marked ripple effects of these property increases throughout the UK, in fact 75% of UK postcodes saw a marked increase in values, with only certain areas in the North East and North West suffering a minor decline. East Anglia alone saw an increase of 26%, as more young families see value for money in areas now regarded as commutable to London.
Interest rates will still remain low for the foreseeable future, though some City pundits predict that there will be an increase to perhaps 1% by the end of 2014.
The UK property market has also been greatly assisted by government initiatives such as Funding for Lending, both stages of the Help to Buy Scheme and increasing value levels for Right to Buy.
More lenders have signed up to Help to Buy, e.g. Virgin Money, Lloyds, RBS, HSBC, and, just recently, Aldermore (who will offer mortgage guarantees on both re-mortgages and purchases of new properties). These finance houses will soon be joined by both Barclays and Santander, or so it is rumoured.
There have also been strong warnings in the press about a possible housing bubble, and the large household debt that many consumers in the UK are carrying. Concern has been expressed about the high loan-to-value loans (95% loans) on offer and the lack of new building (though UK construction increased slightly in 2013).
Certainly, the limited supply and the seemingly insatiable demand for property is keeping prices high, but organisations such as the Council for Mortgage Lenders do not foresee a bubble and, as the Bank of England showed when it quickly curtailed the FLS for mortgages, it will be prepared to act in the event of any suspected housing bubble.
Prices of rural properties and land have also risen again and are very attractive investments (not forgetting the fiscal advantages), seeing an average 8.5% increase.
Foreign property buyers, who make up 28% of buyers in the prime Central London area, do not seem to have been deterred by Government promises of CGT applying to properties which they have bought. Prime London property has long been considered as a safe haven for foreign investors; the majority have entered the market to let the property and London represents good value for money, certainly when compared with more expensive markets such as Dubai, Beijing, Shanghai, Sydney. In any event the prospects of paying CGT for foreign buyers holds little fear for them, it will mean that they will pay CGT on any gains made after April 2015.
2015 is, of course, election year when traditionally the property market holds its breath, so we may well see a slight stalling of the market then.
If you are considering moving in 2014, our specialist, experienced property solicitors will be happy to assist you. Call us on 020 7387 2032 or complete our online enquiry form here.
We will be writing articles this month focusing on Right to Buy, converting commercial premises to residential, buy to let, and advice for both developers and property investors.