Cooling house price growth and tighter mortgage regulations should be a warning signal for anyone depending on capital tied up in United Kingdom property to fund an overseas purchase in 2015.
That is the warning coming from several analysts including the OverseasGuidesCompany.com, who were commenting on statistics released by property portal Rightmove showing the average asking price of a U.K. home fell by 3.3 percent between November and December.
In real terms, that is an average of around £9,000 and is the highest drop the portal has recorded.
While house prices are still expected to rise in the U.K. this year, the rate of growth is forecast to fall, to between 4 percent and 5 percent from around 7 percent in 2014.
Meanwhile, 2014 was a record year for the equity release market, according to the Equity Release Council, which stated that in the first nine months of the year saw more than £1 billion worth of tax-free cash passed into the hands of property-owners through equity release.
“There are reports of mature homeowners turning to equity release because the tighter lending conditions are limiting their mortgage options,” said Angelos Koutsoudes, Head of OverseasGuidesCompany.com.
“Other buyers may well be re-mortgaging U.K. property to raise deposits for a foreign home. We know the overseas market is linked heavily to the U.K. market, so would advise anyone considering equity release or re-mortgaging as a way to purchase abroad next year just to make sure they’ve looked at U.K. market conditions in 2015 and further into the future.
“They should be realistic about worse case scenarios and budget accordingly, bearing in mind interest rates will go up at some point too In the U.K.
The U.K. will also be holding its General Election in May 2015, further adding uncertainty to the market in what will be the most closely-fought ballot for many years.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
