2014 was without a doubt an eventful year for property, both for commercial and residential. Commercial property saw key moments such as the introduction of Commercial Rent Arrears Recovery (CRAR) and both spheres saw a huge change to the calculation of Stamp Duty Land Tax in the Autumn Statement.
But with the year gone, many are looking to what 2015 may hold.
The Housing Market
2014 was seen to be a fruitful year for the housing market with the introduction of the Help to Buy scheme and property prices increasing on average around 8%. Now however it would appear that the outlook for 2015 is not as bright as many would have expected.
Previously there had been recommendations to buy, with the property market predicted to go from strength to strength, but a new note published by stock broker’s Jefferies has completely contradicted this.
After downgrading 14 stocks in the builders and construction sector, they have withdrawn their initial advice of buy and replaced it with warnings that London and the South East could experience house price falls. This has already impacted on developers such as Persimmon who saw their shares drop 5% and Taylor Wimpey down 5.1%.
At a meeting of investors and writers for the Financial Times (The Investment Round table), it was argued that whilst house prices in London have seen a rapid increase in price recently, this is predicted to stop. 2014 saw the peak of house prices and now the growth in the property market has started to slow. With the upper end of the property market falling about 15% in price, the lower end has not seen much change in prices if any.
Many are looking now to the regions outside of the capital, with a closer eye being kept on the South East in general for prices and seeing how these compare to prices across the rest of the country in 2015.
Commercial Property
Commercial real estate appears to have a mixed outlook for the year ahead. Industrial property is still seen to be an attractive option for investors due to the scarce availability of space and units. This is especially true for London which has now emerged as a powerhouse for international accountancy, law, media and technology companies. Not only are the prime locations such as the City and West End in high demand, but also less established areas such as Farringdon, Kings Cross and the South Bank.
However, the future for retail property is much harder to predict. Miles Gibson, head of UK research at CBRE (commercial real estate advisors) has said that whilst the growth of 2014 will spill over into 2015, it is expected to slow down and return to more sustainable levels of growth. We have already witnessed supermarket giants Tesco announce that they will be closing 43 stores across the UK and it is predicted that due to population growth (especially in London) rental prices will be increasing as well.
2015 certainly appears to present a mixed outlook for the future of the property market over the next 12 months, but there are many factors which could have a significant impact, most notably the upcoming general election on May 7. No doubt we are in for an exciting year in the property market to say the least.