Property price growth of 7% predicted in 2015, and regional property markets show promise

Horizontal Rule
29th December 2014

• Property price growth set to be 7% in 2015

• 10% price growth for 2014 on track

• Pension pot spenders will increase UK property investment

• Small housebuilders increasingly important in supply of new homes

• Foreign investors eye up the UK’s regional cities

Stuart Law, Chief Executive of the buy-to-let specialist Assetz, examines the outlook for the UK housing market in 2015:

Property prices

“The UK average house price will increase by around 7% in 2015 as immediate Stamp Duty changes and annuity legislation coming into force early next year will encourage further property investment. Although London has led the way through most of 2014, the Capital is now cooling and 2015 will see UK regions playing a long-awaited catch up, helping to balance the effect of the London slow-down.”

Northern powerhouse

“Our top tip for buy-to-let investors looking North is to seek property in areas with high levels of employment – often in affluent suburbs – where the most reliable and cash-rich tenants are likely to be based. Or alternatively in city centres which attract young professionals with decent disposable incomes. The ‘Northern Powerhouse’ will take root in 2015 as investment and infrastructure plans are firmed up. Foreign investors are also increasingly eyeing up the regional cities where yields are higher and long-term prospects are increasing. Scotland in particular is beginning to see price growth again after the long period of uncertainty hovering over the country.

“Young professionals, previously based in London are increasingly priced out of the property market choosing instead to migrate to regional hubs such as Birmingham – recently named one of the top 10 cities in the world – where house prices are affordable, the culture vibrant and for an improved work-life balance.”

Student accommodation

“This year we saw a shift in the nature of our investors with more people choosing to invest in bespoke and fully managed student accommodation which offers highly attractive gross yields in major student cities such as Manchester, York, Leicester and Leeds of up to 10%, measuring favourably against traditional buy-to-let. With the reforms to pension freedom coming into force in 2015, these cities will see enhanced property price growth as people looking to bolster their pension pots realise they can get more for their money there than in the South.”

Small housebuilders

“Small housebuilders are to become increasingly important in supply of new homes developing smaller parcels of land of little interest to the large developers. However, funding remains an acute problem as the banks remain closed to small businesses. Instead they will increasingly look at alternative finance such as peer-to-peer lending to bring projects to fruition, providing an important and much needed boost to property supply.”

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Stuart Law

Stuart Law, CEO of Assetz Plc, is an experienced & active investor in property, whose views are often sought by the media. Stuart Law's Property Investment Blog