Peter Rollings, CEO at London-based estate agents Marsh & Parsons, is predicting a “flood” of home buyers in the New Year ahead of an increase in interest rates.
Bank of England Governor, Mark Carney, had hinted that UK interest rates could rise in the first quarter of the year however that expected rise from its historic low of 0.5% could be pushed back towards the end of the year.
Peter Rollings also sees the fringe areas of London to see much faster price rises compared with what was previously considered “prime” London.
Peter Rollings said: “The first half of next year is where the main action will take place. Typically we see buyers flood onto the market straight after the Christmas break, having postponed plans in the festive build-up, to make a fresh start to the year.
“But we expect that as the economy strengthens throughout 2016 the Bank of England will become confident enough to raise the base rate, albeit only slightly.
“Nevertheless, even a minor increase can be significant as it is an indicator of the Bank’s long term intentions – namely, to get rates back to where they were pre-2008.
“Borrowers have been spoilt of late, finding a wealth of competitive mortgage deals available, but this will serve as a reminder to would-be buyers that the current rock bottom rates will not last forever.
“As a result, we can expect more buyers and existing homeowners locking in to longer fixed-term mortgages in the early stages of next year, in hope of forestalling the impact of any rate rises.”
The London estate agency predicts prime property values to grow at around 3% throughout 2016 – but fringe areas like Queens Park and Tooting to see much faster price rises of 5% or higher.
The market below £1.5 million is forecast to be the main driver of price growth as Stamp Duty continues to take the shine off the wealthiest segment of the London property market.
Peter Rollings continued: “The Chancellor’s Stamp Duty changes have certainly dulled the London housing market of late, and whilst 2016 will see a return to growth it will be rather lack-lustre.
“There now exists a fundamental unevenness between sellers – who want to sell their properties at the prices they were at six months ago – and buyers, who are seeking recompense for the increased Stamp Duty levelled at them.
“It’s already started but it’s going to take a while to iron out these differences, and in the meantime the brightest spots of house price growth will be in places where average house prices are climbing from a lower base.
“Gone are the days of ‘travel-card zone snobbery’ – and London buyers will increasingly stretch their aspirations southwards and northwards well into zones 3 and beyond to find the best priced properties.
“What we have commonly considered Prime London is growing geographically, feeding off the popularity of new progressing areas.”
