What Could Affect UK House Prices in 2015?
Thursday 25th June 2015
The UK housing market is one of the most well-developed in the world due to the wide range of mortgage options available. Global investors appreciate the upscale residences and stability of the United Kingdom. Here are some of the things that could affect UK house prices in 2015.
No Nation is an Island
In the modern global village, the UK housing market has local, national and international influences. High-end London property continues to attract plenty of attention from wealthy foreign investors. High Street banks dealing with 2008 housing fraud, European Union financial problems and interest rate changes could influence 2015 UK house prices.
1. Lingering Credit Crunch Concerns
In 2008, the UK Credit Crunch revealed the degree to which global financial markets were tied together. Whether the problems started across the pond with Lehman's collapse or with the UK HBOS bail out, there was a serious deficiency in readily-available capital. The British government eventually replaced the former regulatory agency - Financial Services Authority (FSA) - with two new regulatory bodies: the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). These regulatory groups continue to fine High Street banks for mis-sold mortgages.
2. LIBOR Fines
In May 2015, another round of fines was leveled against UK banks - Barclays and Royal Bank of Scotland (RBS) - for rigging LIBOR. Barclays and RBS have been fined upwards of £2billion for this crime. The latest fines are sure to put a damper on High Street mortgage lending and increase distrust of the entire financial sector.
3. Wither Greece & Ireland
Wise British politicians maintained sovereign control over the British pound as the European Union was being formed. Now, the exposure of UK banks to Greek and Irish debt is an issue. Greece missed its June 6, 2015 debt payment. UK banks might have about a £12billion exposure to Greece in 2015. But, the real fear is a "domino effect" leading to renewed Irish debt problems where UK bank exposure was £140billion in 2010.
4. Interest Rates
The low 0.5% interest rate established by the Bank of England has been great for remortgaging and refinancing purposes, but how long can it last? Interest rates must account for risk and inflation. Already, German sovereign bonds have seen interest rates spike upwards. Higher UK interest rates could dampen demand for houses in 2015.
Editorial Contact Details - Conor Shilling