Housing market activity has cooled considerably over the past few months. A lack of homes available for sale, fears over future increases in interest rates, a drop in mortgage lending following the introduction of new regulations and buyers balking at the very high prices being asked have all weighed on demand, which is now contracting in many parts of the country. The moderation in demand will lead to a further easing in house price inflation, and although the strong economic backdrop will help prices to make further gains, we now think house price growth will be slightly lower at 4% in 2015 and 2016.
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