Last year, London propped up the national average of house prices in Britain. There’s no such support this year. Centre for Economics and Business Research (CEBR) expects London to fall 3.3 percent this year. Before everyone say, oh dear, another down, more to come? Do note that London has been rising for many years. If we do not want the property bubble to suddenly burst, a breather is good. In fact one more year of breather may be better. No point in bursting and affecting all other property markets with a negative sentiment. The leading indicators are already showing according to the CEBR. Fewer new buyer enquiries and properties taking longer to sell are already pointing to falling prices. Of course, this may also meant more people are on the sidelines and sellers are holding back due to offers which are falling too short of their expectations. To know the actual situation? 12 more months, we should know. 🙂
Anyway, for 2015, CEBR expects the property prices to be negative followed by a steady growth in years to come. Steady growth would normally point to a sustainable one, in other words, small number. Oh yeah, one main reason is also because the foreign buying may be dropping. According to the Department for Business, Innovation and Skills, 17 percent of property sales in the heart of London are to buyers from Russia, Italy, France and Middle East. As soon as there are some volatility, foreigners would be wary of buying in other countries. Then again, foreign developers are still buying and building. Just look at the few Malaysian developers who are there. Some are even blamed! Read here: Londoners, homeless. Malaysian caused?
It is important to note that other than CEBR, all the other predictions are positive. The Royal Institution of Chartered Surveyors expects an increase of 3 percent. Halifax expects an increase of between three to five percent. Savills said an increase of two percent while the Office for Budget Responsibility predicted an increase of 7.4%. I cannot believe the last prediction. At current juncture still 7.4 percent? If that happens, then it’s like London is a fairy tale amidst all the current ongoing developments where even the second largest economy is growing much, much slower than previous years. Happy knowing.
written on 10 Jan 2015
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