London prime rent prices to outpace property growth in 2015

London prime rent prices to outpace property growth in 2015

Predicting what's going to happen in any given year in the property market can be a difficult prospect. However, by looking at predictions and working out the probability of price increases or falls, investors can often find out when the best time is to strike in order to get the best prices and maximise their chances of success in their venture. 

So what will this year bring in the property market, and how can buyers and investors use this information to make the right decisions moving forward?

What will this year bring for the property market?

According to the latest predictions from Marsh & Parsons, this year will be a little different to the last few we've seen in the UK property sector. While London has been red hot for a number of years now, particularly in 2013 and 2014, this year will see house prices cool off ever so slightly, with a new arm of the market coming forward as the top performer. 

Marsh & Parsons' said that property prices will increase by around three to five per cent in the year ahead. However, at the same time, rental prices for tenants should increase by ten per cent, at least twice the pace of house prices in the capital, giving investors something of a boost. 

The reason? Uncertainty in the market will come about thanks to the worries surrounding the election in May. With voters unsure who will come to power and what this will mean for the property sector, many will be looking to rent rather than buy, particularly in the first six months. This change in focus will see demand swing in the two sectors, with the rental market seeing price increases as a result. 

Is now the right time to buy to let?

Early 2015 is definitely a fantastic time to invest in the rental market in London. As Marsh & Parsons has predicted, the probability is that as we get nearer and nearer to the election in May, more people will be looking to rent when they might otherwise buy a home. 

For those who are looking for strong returns, the demand that will come in this sector will allow them the chance to get higher rental prices from their tenants, which translates into far better yields than the lows we saw in 2014, when some parts of London fell to 2.7 per cent yields. 

Is the time right to buy a property?

While rental prices may make it seem like the market is primed for buy-to-let investors at the moment, those who are looking to buy their own home should also take note - it's a good time to buy as well. 

The political situation, as stated, will mean fewer people buying homes as more choose to rent in the short term. What does this mean for buyers? Less competition, which means buyers not having to inflate their offers in order to ensure they secure a property. 

And with predicted price rises at only three to five per cent, this is a great time to grab yourself a good deal. In 2014, prices went up by 12 per cent in the capital, and in 2016 they're expected to near double figure growth again, so clearly 2015 is the time to buy for those looking for something of a bargain. 

Then, of course, there's the prospect of capital gains. Despite the low property price rise this year, it is widely thought that in the next five years, they will continue to grow. So that home you buy now could be worth a lot more by 2020. 

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