Property prices are the subject of constant speculation and debate, with even the smallest fluctuations generating column inches and affecting a range of potential buyers and sellers.
Rises and falls are tracked diligently, and thanks to this it is possible to observe certain trends and extrapolate data to predict what is going to happen in the near future and even mid- to long-term.
Using the latest data and input from industry experts, we have looked at what 2016 has in store for the housing market and why buying now may well be a good idea.
Current state of the market
As with any sector, regional variations will always come into play where house prices are concerned, and this has been no different in 2015, with a 'mixed picture' across the UK regions observed in the third quarter.
Figures from Nationwide show that the rate of house price growth accelerated in southern England and particularly London, but slowed down in the Midlands and most northern areas.
Land Registry figures meanwhile show that property market growth has continued to cool, with house prices up 4.2 per cent compared to 2014, and the East of England continuing to see the biggest annual increase, with prices up 8.4 per cent compared to a year ago.
Almost every region has seen prices edge higher compared to 2014, though in many areas growth has been much slower compared to the regions that are ploughing ahead such as the East, South East, London and South West.
Moving forward, prices increases will vary wildly according to location, with Savills predicting that London may see no inflation whatsoever in 2016 while homes elsewhere could rise significantly.
Lucian Cook, director of residential research at Savills, said there is limited capacity for house price growth in the mortgaged part of the London market over the next five years, based on affordability grounds alone.
However, he added: “At the other end of the scale, there is more capacity for price growth in the North East, though the economic drivers for it to be realised are weak. Against this context, we expect the South East to see the highest levels of house price growth over the next five years and London the lowest, with buyers priced out of one moving to the other.”
This prediction of overall growth has been echoed by Knight Frank, which estimates that cumulative growth in UK house prices will total a little over 18 per cent in the five years to 2020.
The analyst explained that the cumulative impact of recent and future reforms to Stamp Duty, mortgage interest relief for investors, Capital Gains Tax and Inheritance Tax will take a while to filter through to the country’s housing market.
The UK as a whole is forecast to see house price growth of 3.5 per cent in 2015, 2.5 per cent in 2016, 3 per cent the year after, and 4 per cent in both 2018 and 2019.
Potential for greater growth
Think-tank the Centre for Economics and Business Research (CEBR) is even more optimistic about impending price rises, estimating that home values will rise by more than expected this year and could surge by £60,000 over the coming half a decade to average more than £320,000 across the UK by 2020.
House prices are predicted to rise by 5.6 per cent in 2015 alone - a major increase from Knight Frank’s estimation of 3.5 per cent, and up from CEBR’s previous prediction of around 4.7 per cent.
According to the think-tank, the increase reflects the shortage of housing stock, which is placing upward pressure on prices.
Although slower growth is projected in the years ahead as high valuations price more prospective buyers out of the market, price increases are still predicted to stay at around 3.5 per cent per year for the next four years.
What it means for buyers
Mortgage approvals for house purchases are continuing to rise, with a steady increase witnessed across Q3, and it is clear that current and prospective homeowners are increasingly getting their foot on the ladder or moving up it.
With prices set to rise for most of the next five years, forward-looking homebuyers are keen to take advantage of new offers and secure an investment that could reap dividends in the future, should prices begin to even out.
With Hometrack revealing that inflation in urban areas continues to outstrip the national average, it is clear that prices will only continue to increase, meaning now may be the time to take the plunge and buy that new home.