A leading North East property expert is predicting house prices in the region could rise by as much as 10% in 2015.
Ajay Jagota of sales and lettings firm KIS believes that reforms of pensions and stamp duty will bring a bounty of new buyers to the market, creating a “bumper year” for North East property.
Pension changes announced in last year’s Budget, and due to come into effect this April, will allow savers over 55 greater freedoms to take their pensions as a lump sum.
So-called “silver landlords” are likely to take advantage of the return on their investment offered by buy-to-let properties by buying homes to rent out, pushing up prices.
Chancellor George Osborne also announced in December’s Autumn Statement that homebuyers purchasing properties worth less than £937,000 will pay less stamp duty – cutting £1000 from the cost of buying a North East home and encouraging more buyers into the market.
Low inflation and expected delays in lifting interest rates have also led to suggestions of a “mortgage price war” as several major lenders launch New Year “record low” fixed-rate deals.
Mortgage approvals, however, this week hit a 17-month low – and are 23% down on this time last year.
Property expert Ajay Jagota, founder of lettings business KIS, says he expects to see a “bumper year” for North East property despite this.
Mr Jagota said: “Despite what the doom-mongers might tell you, 2015 has all the makings of a bumper year for North East property.
“The relaxation of pension regulations will undoubtedly bring more purchasers to the market both as owner-occupiers and buy-to-let investors, pushing up prices. At the same time, stamp duty changes will make it cheaper and easier to buy a home.
“The North East rental yields are as good as any in the UK and as rental returns rather than capital appreciation are key to making money out of property, our region stands to gain the most. As a result I think we can expect to see double digit house prices growth in the North East – 10% seems a good bet – with rents set to rise in the region of 6%.
“All the correct conditions exist in the North East - low prices, high rental yields, strong demand, affordability of mortgages – mean that if buyers and investors decide 2015 is a time to buy then the self-fulfilling prophecy could raise prices just like they did in London.
“As a result, bargain hunters need to strike early to get the best deals, and should stick clear of signing lengthy tenancy agreements if they’re renting at moment and are looking to purchase”.
James Mather, 28, and partner Claire Turner, 27, are first-time buyers looking to buy a property in Northumberland.
Mr Mather, a factory worker, said: “We have managed to get a deposit thanks to our parents, but even then it’s going to be a struggle.
“I’m not as optimistic about the housing market at the minute - I think things seem pretty static and I don’t believe we will see much change this year, although I’m hoping I’m wrong.”
The UK housing market saw a spring and summer boom in 2014, particularly in London and the South of England, before activity dropped away a little towards the end of the year.