House Price Prediction for 2014
With a new year comes the usual round of predictions from the housing industry analysts. There has been more activity than expected over the winter of 2013/2014 so far, but will the recovery continue? Ray Boulger of mortgage broker John Charcol, says that he expects house prices to go up by 8% in 2014. This would match the increases seen in the Nationwide and Halifax price indices seen at the back end of 2013. Many other analysts agree, including the Halifax.
The biggest recent housing dip was in 2011, following a peak in 2007, but the market has been recovering slowly ever since. Two factors drove market activity upwards last year; they were Funding for Lending and Help to Buy. Funding for Lending offers cheap Bank of England funds to lenders on the proviso that it is lent onto mortgage borrowers and small businesses. This scheme is now restricted to business borrowing only. Help to Buy is a scheme that gives home buyers a cheap loan for up to 75% of the purchase price and has recently been extended.
By continuing to fund these schemes the Government clearly want to continue to see a buoyant housing market, but not everyone is so keen. Others are worried about a housing ‘bubble’ with lack of supply being the factor that is currently driving up the prices – a situation that is not sustainable. The Bank of England traditionally cools a runaway market with interest rate hikes, but it remains unclear as to how the current market conditions will react to that after they have been at an all-time low for so long.
Property website Rightmove expects prices to rise by 6-8% during 2014, but this ranges from 11% in London to a 5% increase in the north east. It also predicts that the cost or renting will go up by 2% during the year.
Sources: bbc.co.uk, rightmove.co.uk (image courtesy of theguardian.com)