British property prices will fall in 2015 following a steep rise over this year, according to a leading forecaster the Centre for Economics and Business Research (CEBR).
Researchers predict prices to fall 0.8 per cent year-on-year in 2015, as the Bank of England is widely expected to raise interest rates from a historic low base level of 0.5 per cent.
CEBR said it expects a “correction” rather than a slump to follow a forecasted 7.8 per cent growth over 2014, the strongest progression since 2007 and more than double the rate of the previous year.
“Price falls next year will be modest and we shouldn’t be too worried about this, we are not anticipating a crash,” said CEBR head of macroeconomics Scott Corfe.
“The market is adjusting after getting ahead of itself at the start of 2014.”
Tougher requirements for buyers to get mortgages and demands for higher deposits will also dampen the market, Corfe said.
Prices will then increase 2.6 per cent year-on-year in 2016, with gains of around 3 per cent in the following years, according to the researchers.
After average house prices reached record highs over the northern summer, the market is showing signs of slowing with estate agents reporting fewer enquiries and indications of a cool down in London, which has driven growth.