Property prices in the UK will grow by 25% in the next 5 years

The market of real estate of great Britain is entering a period of uncertainty. Short-term market confidence, which preceded the introduction on 1 April 2016 of the increased Stamp duty for investors was primarily caused by increased activity of investors “buy to let”, in a hurry to buy a property in England before the introduction of the new rules). Now, three factors affect the buying sentiment in the market. First, the referendum on the British exit from the European Union. Second, already in force the new rates of Stamp duty and third, the upcoming elections to regional authorities.

An additional factor affecting the market was the weakening of the pound against the U.S. dollar, which is favorable to individuals who receive income in dollars.

The result of the severe rates of Stamp duty in the upper sector of the market was the slowing of inflation in the housing market, especially in the market of real estate of London. So, in the Central districts of London , according to polls, more than 38% of respondents expect to see falling prices for luxury housing in the next three months.

Significantly changed the mood in other parts of the UK. Thus, the number of people who believe that property in the UK will likely rise in price than to fall, has decreased from 44% to 17%.

However, in the long run, the market there is optimism in the next 5 years, the average expected increase in prices by 4% per year on real estate in the United Kingdom, and 3% each year on property in London. Inflation in the rental market, as expected, also not greatly exceed the values of previous years. Despite fears that landlords will take their costs to tenants, forecast growth rates in the rental market – not more than 4.5% over the next five years.

The referendum and the elections to local authorities will certainly have short term influence on the market. However, in the long term will be crucial to have an imbalance of supply and demand and lack of supply in the market will lead to growth of prices for residential property in the UK by 25% over the next five years.

® Alice Morgan. 15.04.2016 G.

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