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UK house prices are predicted to rise by up to 6% in the first quarter of 2015 but then start slowing as the May general election approaches, according to one forecast. Prices could even start to drop by around 2% in the last half of the year and it could be a worse scenario if the current opposition Labour party wins, says the prediction report from low cost online estate agents Hatched. Hatched also predicts growth to continue at somewhere around 4% to 5% in 2015, whilst warning home owners to be prepared for a rocky spell around April, May and June, with the uncertainty that a general election inevitably brings. According to Adam Day, the firm’s managing director, a Labour victory in May could potentially have a hugely disruptive effect on the property market as the party is known for surprising voters with unexpected measures and excessive red tape. He pointed out that the last Labour win led to the introduction of Home Information Packs which then had to be scrapped. ‘The way they were introduced wasn't thought through. The government announced the specific date that HIPs were to become a legal requirement, which led to hundreds of thousands of home owners rushing to put their house on the market in an attempt to avoid the cost and bureaucracy associated with their production,’ he explained. ‘It was this slapdash strategy, which consequently led to an oversupply of properties that brought on the beginnings of the crash in 2008,’ he added. Interest rates are also expected to rise in 2015, although for many home owners it will not have a huge impact. But it is likely to affect first time buyers who tend to spend a higher percentage of their income on home costs. However, Hatched expects interest rate rises to be a contributor to the slowdown for the housing market in the final half of the year. Day also expects there to be a significant reduction in high street agents. ‘Many agents will have over staffed themselves this year because it has been so busy, so when the property market does begin to slow in the middle of the year, they will have over extended themselves,’ he suggested. He believes that 2015 will see online estate agencies continue to prosper and traditional agents who decide to join the online revolution and thus respond to customer demand by driving efficiencies with the aim of lowering their fees, should also enjoy success and stand out in a market which is likely to get tougher as the year progresses. Continue reading →
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