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Regional housing growth to overtake London in 2015 – Halifax

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Global economic worries could reduce demand and activity at the top end of the London market in 2015, leaving more concentrated house price growth in the regions next year, said the Halifax.

Tight affordability and global economic fears mean house price growth in London and to a lesser extent the South East is unlikely to replicate this year’s frenzied house price growth in 2015.

Halifax’s housing economist, Martin Ellis, (pictured) said: “Outside London and the South East, house prices do not appear markedly out of line with fundamentals. We, therefore, expect to see a more even, regional pattern in house price growth during 2015.”

He added:”The fortunes of the housing market are closely tied to developments in the wider economy. The strengthening in the UK economy has contributed to higher housing demand over the past 18-24 months.”

Ellis said higher house prices, tighter mortgage rules, low earnings growth and talk of an interest rate rise have all combined to temper housing demand since the summer.

Annual price growth in the three months to October slowed to 8.8 per cnet from 9.6 per centin September this year.

Mortgage approvals in September fell for the third successive month to a 14-month low, whilst home sales are at their lowest level since October 2013.

The prospect of higher interest rates at some point next year and the deterioration in affordability over the past year are expected to be key factors curbing housing demand.

The lender predicts house price inflation will hit 3 to 5 per cent next year.

“Annual house price inflation is expected to have peaked at around 10 per cent in July 2014. A further moderation in house price growth is likely in 2015 as supply and demand become increasingly better balanced,” said Ellis.