Property Predictions for 2015

http://www.ispeech.org

This post was stimulated by a request from Vanessa Warwick from Property Tribes to contribute to a thread there...so here goes my property predictions for 2015...if you prefer to view the PowerPoint presentation I prepared here it is: 2015 Market Predictions The Property Voice an extract is shown below

I have broken down my top 5 property predictions into categories:

1. Politics
2. Investor mix
3. House prices
4. Rents
5. Disruption

1. Politics: Uncertainty & confusion

• General election in May
• Politicisng of PRS and more divergence than before
• PRS & housing a much bigger election topic
• An array of opposing possible policies & influences discussed:
• Rent controls | Licensing & regulation | Social & affordable housing
• Private investment stimulus | Benefit bill | Garden cities
• Green / brown-belt planning | Shared living / downsizing, etc.

Result: Lots of talk, spin & mixed messages but not much direct intervention in 2015…maybe later though…

2. Investor mix: A changing investor landscape

• Less foreign investment due to CGT changes in April & stronger pound
• More ‘grey’ investors following pension changes
• More new entrants due to recent house price growth
• More existing landlords adding to portfolios as property cycle is on the up-curve

Result: Changing make up of property investor mix with a growing PRS but more domestically driven than in recent past

3. House prices: More patchy regional growth

• Central London stagnates
• Outer London and commuter towns lead the way
• Investors may look increasingly wider for investment opportunities
• Cash buyers, low LTV borrowers, Help to Buy FTBs and investors will drive demand
• MMR bites into homeowner market for second-steppers etc.
• One to watch is institutional investors coming into rental market

Result: Much more varied house price growth across the country

4. Rents: Lots of pressure on rents

• Universal credit & the welfare policy leading to more arrears and eviction in LHA sector
• The ‘cost of living’ agenda from campaign groups
• Affordability issues in particular central London
• Media spin and misrepresentation of market data
• Supply restriction issues in cities driving rents in concentrated areas
• Slow wage growth limiting people’s ability to absorb increases

Result: A tough year for rental returns through real (economic) & perceived (spin, media, campaigning) issues

5. Disruption: New technologies & business models disrupt the status quo

• ‘Sharing economy’ will extend it’s reach into housing & rental market
• Airbnb & others drive short-term rental in city locations…may lead to lower supply for long-term rents
• New portals like OnTheMarket & easyProperty will create more competition but also more confusion
• P2P lending to take a bite out of mainstream lending, including BTL funding alternatives
• More new technologies…as yet unknown
• Fees could get squeezed and new business models could emerge (opportunity & threat)

Result: A changing & uncertain landscape especially for traditional providers servicing the property market

Summary

Election years are always tricky as far as I am concerned. Much is spoken of, from different factions, to try and sway the views (and votes) of the electorate. It is therefore very confusing and somewhat uncertain. We have had nearly five years of one coalition and it would not surprise me if there was another hung Parliament and therefore another coalition of some description. I think whatever happens will result in change however, and in particular towards the private rental sector (PRS).

The PRS and housing in general has not been such a 'hot topic' for several decades but this next election I think it will be a central issue. No matter what party (or parties) come into power after the election in May 2015, any resulting policies affecting the housing market are likely to take some time to come into fruition. As a result, most of the change suggested from the political agenda is likely to impact us more beyond 2015 but impact us it surely will.

So there it is, more about trends than precise property predictions I would say. Do you agree with me...if not: what are your property predictions for 2015?