The reasons for the growth in property prices in the UK

The largest auditing company, a member of the Big Four accounting firms in the world, Pricewaterhouse Coopers, presented its forecast of the housing market in the UK for the next 7 years. According to the forecast, the company is expected to increase the average price of residential homes in the UK from £225000 in 2013, at least up to £300,000 in 2020.

In 2013, in connection with the support of government programs to stimulate the real estate market of UK, price increase has already amounted to 3.5% year to date. It is expected that the growth trend will continue and by 2014, the average price of residential property will already 230000.

Given the limited new supply of housing and high demand for it, then, looking ahead, the company predicts an annual price growth of 4% until 2020.

It is important to note that prices in the third quarter of 2013 peaked in 2007 in terms of money, however, when adjusted for inflation, prices are now still 15% below their pre-crisis peaks.

Meanwhile, the national real estate company Strutt & Parker has revised upward its earlier forecasts about the growth of prices by 4.5%. According to the latest report of the company, the level of transactions in the real estate market of London is the highest since 2006 . This market is growing mainly due to foreign investors. There is a fundamental difference in the reasons for the increase in property prices throughout the UK and the reasons for the price growth in the elite areas of London. If the whole of the UK the price increase is due to government stimulus measures mainly with borrowed funds, in the elite areas of London, there is a natural investment interest, where buyers pay in cash without resorting to Bank loans.

Looking ahead, it should be noted that the luxury sector of the London real estate continue to be attractive to international investors in connection with the restoration of the economic situation in the world and rather mild course of sterling, the trend is on the decline, according to forecasts, will continue.

Another factor for the increase in property prices in the UK will be the restoration of the economy of the UK, where a special role is played by the financial sector. Employment in the financial and business sector increased significantly in September 2013 and this trend will continue until the end of the year.

Thus, there are objective economic reasons for the growth in property prices in the UK in the coming years. The only possible moments of uncertainty – this is the 2014 – 2015 when General elections will be held. It is likely the uncertainty surrounding property taxes more expensive than £2 million and the possible mansion tax. During these years, property prices can be very sensitive to the political situation and expectations, it is possible that in 2015 they will be smooth. Starting in 2016, we can expect strong growth.

® Helen Antre 13.11.2013 g.

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