Housing market activity dropped sharply in the second half of 2014 as fears of a rise in interest rates, high housing valuations and a lack of stock on the market constrained demand. But several factors suggest that housing market activity will now begin to pick up. The economic backdrop remains very favourable, and mortgage rates will stay close to record lows. The change to stamp duty will also boost house prices, primarily by reducing the up-front costs of homeownership. We expect the reform to boost prices by an additional 3% to 5%, and house prices will rise in total by about 6.5% over 2015. But the boost to price growth will be short-lived as buyers find their stamp duty savings have been more than wiped out by the resulting rise in prices, so gains in 2016 will be a far more modest 2%
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services