Prime Central London (PCL) house prices will grow three per cent in 2014, followed by two per cent 2015, according to a leading London property consultancy.
After the forthcoming general election however, consultancy Strutt & Parker predicts prices in PCL to rise 6.5 per cent in both 2016 and 2017. Meanwhile, its predictions for homes across the UK as a whole are more bullish – nine per cent growth in 2014, followed by five per cent throughout 2015.
These forecasts are a stark contrast to 2010 and 2011 when PCL prices surged by over 13 per cent year-on-year.
Whilst improved economic foundations would certainly suggest that prices will continue to rise over the next few years, the biggest perceived uncertainty surrounding the property markets over the remainder of 2014 and 2015 will continue to be the looming election.
Stephanie McMahon, Head of Research at Strutt & Parker, explains: “Agents are reporting a continued slowdown in some areas as buyers and sellers nervously await news on the upcoming General Election and the potential for Mansion Tax. This is beginning to feed through into transaction levels. As is often the case in uncertain times, it may also be that transaction levels will decrease in the run up to May 2015, but values could hold up better than expected.
“Above and beyond the General Election there are a number of other potential headwinds slowing the property market, including talk of interest rate changes and the Mortgage Market Review (MMR) and the slowdown it is causing.”
“The main driver for price market price growth in recent years has indeed been the consistent shortage of good quality housing stock in highly sought after prime locations. Any future increase of supply to the market in central London would therefore put downward pressure on PCL house prices and we have taken this into consideration in our London predictions.”