Halifax predicts “subdued” British housing market in 2016
The Halifax has warned that the British housing market will slow in 2016, with average price rises ranging from 4% to 6%, considerably lower than the current 9.7%. Britain’s largest mortgage lender also warned that it will become even more difficult for first time buyers to get on the housing ladder and that the prospect of an anticipated 1% interest rate rise will slow price rises. London will see the biggest slowdown, with mortgage affordability in the capital now worse than its long run average; the only region in the UK where this is the case.

Price rises are set to be broadly in line with income growth beyond 2016 as steadily rising interest rates increase the affordability constraint on demand.

It warns that increasing difficulties in getting on the housing ladder, together with a growing prospect of at least one interest rate rise, will put the brakes on higher rises.

Britain’s biggest mortgage lender, the Halifax, says the housing market will slow next year with average price rises of four to six per cent - lower than the current 9.7 per cent.

“There’s little reason to expect any fundamental shift in the key market drivers in the immediate future. As a result, the substantial imbalance between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016” says Halifax’s housing economist, Martin Ellis.

“On average, UK house prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates.Nonetheless, with house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder” he adds.

Overall, the Halifax believes that sales nationally in 2015 are likely to be very similar to 2014’s 1.22 million.

London will see the biggest slowdown. Mortgage affordability in the capital is now worse than its long run average; the only region in the UK where this is so.

“Cash transactions account for around one-third of all home purchases in England and Wales. There are significant regional variations around the national average with cash sales representing the smallest proportion of total sales in London (27 per cent) and the highest in the south west (40 per cent)” explains Ellis.