What will your home be worth in 2015?

publication date: Apr 4, 2014
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

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What will your home be worth in 2015? How to forecast your property’s value

OK, so you might be buying your first home, your dream home or a property you hope to make money out of. That’s great, but what will it be worth in 2015? What will it be worth in five years?

In the main, the information you are likely to receive about property prices is scary headlines telling you ‘prices are rising’ or ‘prices are falling’. Well here’s the really big news:-

  • Property prices sometimes rise
  • Property prices sometimes fall

And that’s not going to change anytime soon!


So rather than worry about whether prices rise or fall, it’s much more useful to be aware of what’s likely to happen so you can plan ahead and have a back-up plan if things go horribly wrong. And without wanting to depress you, they do. People get divorced, get into debt, decide to marry and move or get a new job or lose an existing one.

For years now we have had access to ‘sold property prices’ and we have more property companies who are much better at forecasting what’s likely to happen than economists of the past – who to be fair have been rubbish!

Whether you are buying, investing, building or working out whether it’s better to buy now or continue renting and save more, you can have some idea of what might happen to your property’s value.

Method 1: See what the ‘experts’ say


We’ve pulled together all the forecasts from the likes of Savills, Chesterton Humberts and Knight Frank. Over the next year (2014), they predict 5 to 6% for the UK and 4-5% in 2015. However, these are made up of big regional differences.

London for example, is expected to grow by 8% in 2014 and the same again in 2015, while Scotland is expected to grow by 3-4%. 

So, if you have a property in London worth £200,000 now, by the end of 2014 it should be worth £200,000 x 8% = £216,000. If you have invested a 10% deposit ie £20,000 and sold, minus some sale costs you would get your £20,000 deposit back plus £216,000 - £200,000 - £3,000 in costs = £13,000. So your property in one year could earn you £13,000/£20,000 = 65% return – not bad!

These are very loosely calculated figures as it doesn’t include the cost of buying and of course, you would have to find somewhere else to live if you sold up. The price of a bigger property has probably gone up too, but because you have borrowed money to buy an asset (property) which goes up in value, the money you would have to put towards your next property would be more:-

  • £20,000 (original deposit)
  • £13,000 (extra money earned from the property price increase)
  • £33,000 total

As a 10% deposit, this (plus the costs of buying) would buy a property of £330,000 instead of the £200,000 property you have now.

Download the latest property price predictions by region

 

 

Method 2: Check out your local sold property prices

And with sold property prices being published, you can forecast your property’s value much more accurately – as long as property prices change as they have historically.

For example, if you live on Acacia Road and sold property prices for your type of property were £75,000 in 2000, and selling for £125,000 in 2014. The average price increase over 14 years would be £125,000 - £75,000 = £50,000/14 years = 3.5% each year.

Now during this time, they may have increased by 10% year on year during the boom years of 2000-2003 and then dropped by 20% in the crash from 2008 to 2009. But ‘on average’ if you are buying and holding for 10 years, this gives you an IDEA of what your property might be worth. As properties on your road/locally come up for sale, you can see how much they sell for and compare this to the value of your own property.

Better still, with the credit crunch hitting property prices so hard, whenever you buy, check what they were sold for in 2009, the low point for property prices. This is the risk you take when you are buying now. If you buy for £125,000 today and they sold for £100,000 in 2009 – a 20% fall, then factor this into your decision making when buying.

If you had the choice between a property and a road where prices fell by 20% in 2009 versus ones which only fell by 10% and money is a concern, then the latter is probably the ‘safer bet’.

Of course there are no guarantees these figures will be right, but everyone forecasts and these methods at least help to help you make decisions about buying now, renting until next year or whether to invest or not.

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All our information is brought to you by Kate Faulkner, author of
Which? Property books and one of the UK's top property experts.
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