As we pass the halfway point in 2014, Primrose Hill estate agents and property experts are looking ahead. Predicting what might happen to the housing market in the future has become a crucial part of the country's economic planning, with a unified desire to avoid the same mistakes that led to the 2007-2008 property market crash.
Future forecasting will give rise to new ways of thinking in the property sector and this will have an impact on the wider UK economy. However, the results will be most keenly felt by home movers looking to make decisions in the next five years. Buyers of property for sale in Primrose Hill should be aware of the ideas that might be applied to the London property market in the short and long term.
Here's a round-up of some possible changes to the property market:-
Rise in interest rates - anyone using a mortgage to buy property for sale in Primrose Hill and the rest of London will need to keep track of the Bank of England's intentions. While the historically low rate of 0.5% was held in July 2014, Bank governor Mark Carney has intimated there will be a gradual and limited rise in rates, with a projected 'new normal' of 2.5% by 2017. When interest rates rise, mortgage rates tend to follow, making monthly repayments more expensive.
Introduction of sealed bids - already a practice in Scotland, the idea of sealed bids has reared its head again in England thanks to a rise in gazumping - where a new buyer with a higher offer enters into the frame once a lower offer has already been accepted. A new survey by purplebricks.com revealed that two thirds of house hunters in England would prefer a sealed-bid process of buying property.
Flash finance sales - flash sales - when products or services are sold at a reduced rate for a very limited period of time - are popular in retail and now they are making their mark in finance. Sainsbury's Bank recently held a flash sale on a personal loan product - slashing the rate for a matter of hours. Whether this practice crosses over to the mortgage market remains to be seen.
Property investment limits - it was recently revealed that one Kent couple had 1,000 investment properties to their name, prompting calls for a limit on how many buy-to-let properties one person can own. A cap of one investment property per landlord has been muted but Primrose Hill estate agents question the workability of such an idea.
Capping mortgage lending - lenders traditionally used income multiple to work out how much a purchaser could borrow but the last decade has bought some flexibility to this practice. However, the Financial Policy Committee now suggests a restriction on new mortgages when it comes to wage calculations. Loan-to-income ratios above 4.5 already have a new limit of 15% of total mortgage lending as part of Mr Carney's 'macroprudential tools' to control the property market. If instability returns, there could be a blanket restriction on income multiples.
Early end to Help-to-Buy
The Help to Buy Equity Loan scheme has been extended to run until 2020, while the Help to Buy Mortgage Guarantee initiative is due to end in 2016. While the Chancellor believes both programmes are essential in helping first-time buyers, those with small deposits and the house building industry, the Bank of England is ready to step in and advise on the premature closure of one or both, should the property market overheat.
John Alcorn is a London property advisor, writing about the property and market trends in prime Central London. By researching the latest information from Primrose Hill estate agents, he brings the latest news on property for sale in Primrose Hill, Camden Town, Regent's Park and Marylebone.
