London is likely to see further house price growth of 5% next year, according to David Pollock, managing director of leading London estate agent Greene & Co.
‘The house price growth we have seen across the capital has been fuelled by overwhelming levels of demand and intense competition for a relatively limited supply of properties. This growth has impacted affordability for first time buyers, but we have also seen a number of second steppers unable to move up the ladder because of the sharp price rises,’ he said.
‘Areas such as Kensal Rise, Kentish Town and Finsbury Park are expected to see pronounced growth of up to 6% next year. Neighbouring the established postcodes of Notting Hill, Hampstead, and Islington respectively, these locations are experiencing a great deal of regeneration and also offer excellent amenities, schools and transport links, ideal for young professionals and growing families,’ he explained.
However, with rumours flying around about a possible introduction of a mansion tax in 2014 means that there is uncertainty in the £2 million plus market. ‘This market has already been hit by stamp duty rises this year and also recent capital gains taxes on overseas sellers, so the rumours will impact the confidence of both buyers and sellers in 2014,’ said Pollock.
He pointed out that sales transaction levels have increased considerably this year with improved mortgage availability and the introduction of government schemes, such as Help to Buy.
‘But the high levels of activity have been hampered by a shortage of qualified surveyors and as a result valuations are being delayed by up to a month. In this competitive market any delays can result in the sale falling through, so it is imperative that this shortage is addressed in the New Year,’ explained Pollock.
He also said that changes to the Funding for Lending Scheme (FLS), which come into effect next February, will prevent banks from using the scheme for mortgage lending, in a drive to move their focus to SME lending. ‘This move could see the variety of attractive mortgage products currently available reduce and make it more difficult for buyers to secured low LTV mortgages.’
He pointed out that in a market where gazumping and sealed bids are becoming more common, new homes are an attractive option for many buyers. ‘Yet, house building levels need to increase considerably to placate demand and provide enough homes for the capital’s growing population. In 2014 the Government must amend the planning process, ensuring permission for new sites is granted swiftly to reach Mayor of London’s goal of building 42,000 homes a year,’ said Pollock.
He added that the rental market is also performing well, with tenant demand strong and a constant, healthy supply of new rental stock. Rents are expected to stabilise or dip marginally next year as the increase in supply gives tenants greater choice and creates a shift in power in favour of the tenant, which is likely to continue into 2014.
