What does the coming year hold in store for the property market? At around this time of year forecasts for the year ahead begin to come in and the overwhelming message is that everything is going up, from house prices to sales volumes.
Liam Bailey, Global Head of Residential Research at Knight Frank, said: “Property price growth in 2014 and 2015 will be substantially higher than inflation.” Knight Frank is forecasting that average UK house prices will rise by 7% in 2014 with cumulative growth in UK prices of 24% to the end of 2018.
Chesterton Humberts does not think there will be a property bubble in the short term, due to various government initiatives which will ensure that affordability remains manageable, and is forecasting that national house prices will rise by up to 8.2% in 2014, ahead of a predicted 8.1% rise in Greater London.
Lee Watts, Managing Director of Kinleigh Folkard and Hayward on the London market: “Overall I believe we will see a further increase in property values between 7% and 10% by the end of 2014”
“Concentrating on house prices alone gives a misguided picture of housing market health. A liquid and active market is the key to ensuring a stable and sustainable housing market in the UK.” Fionnuala Earley, Research Director at Hamptons International.
The Hamptons International Housing Market Forecast highlights that while we have been operating in a half-market – with activity at just over half of 2008 levels – transactions are on the increase and will continue to grow due to economic recovery, a return of confidence in the market and Government stimuli such as Funding for Lending and Help to Buy.
In its 2013 review, Kinleigh Folkard and Hayward notes that transaction levels in London, which have remained fairly static over the last three years at around 90,000, are likely to increase this year by 15-20% to over 105,000. Transaction levels peaked in 2006/7 at over 160,000.
Impact of Help to Buy
“Help to buy will allow some trapped renters to access home ownership even though costs of home-ownership will exceed those of renting,” says Lucian Cooke, Savills Head of UK Residential Research. “But we anticipate that the major beneficiaries of any increase in net lending are likely to be existing homes owners.”
“Help to Buy 2 is a necessary scheme for those able to afford to repay a mortgage but without a large enough deposit, and should further stimulate the market,” says Peter Young, Managing Director of John D Wood & Co. “In fact recent reports show that mortgage lending is now at its highest level since before the financial crisis and ‘second steppers’ are house hunting, confident there will be a buyer for their first property.”
Whilst Help to buy only applies to properties under £600,000 Strutt & Parker suggests that prices up to £1 million could also see some spill-over over the coming months through a ripple effect.