guaranteed rent | Positive signs in the housing market
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The Centre for Economics and Business Research (CEBR) predicts an average UK home will cost £227,000 in 2014.
If the prediction is correct it will surpass the pre-crisis peak for the first time and by 2018 a typical UK home could cost 20 per cent more than this year.guaranteed rent
Having just experienced one of the busiest months in the housing market for some time, Darrell Knight, branch manager for Charles Barnard, based in Shepton Mallet, says it was no surprise to read such a positive forecast.
Darrell said: “In every area of the market we have been busier in April 2013 than we have been for a long time. There are more properties coming on to the market, with vendors being realistic with their prices, and at the same time we have seen a significant increase in potential purchasers walking into our office to register. It genuinely is a good time for vendors to consider having their property valued, if only to see where they are in the market at the moment. They may be pleasantly surprised.”
Darrell’s assessment of the report is that next year CEBR expects house prices to be 2.3 per cent higher than in 2007. The CEBR also predicts the average house price will be £222,000 this year, 1.4 per cent higher than in 2012, but just under the peak achieved immediately prior to the financial crisis. In the short term, lacklustre wage growth, domestic banks’ ongoing recapitalisation efforts and Eurozone financial unrest are expected to subdue house price growth this year and next. Thereafter, a strengthening economy will hopefully lead to rising wages, while population growth is projected to outpace housing supply increases. Darrell predicts these two market fundamentals will lead to accelerating house price growth over the medium term. By 2018, the CEBR expect a typical UK home will cost £267,000, as house prices rise by 4.6 per cent over that year. In 2018, they predict UK house prices will be 20.4 per cent higher than this year.
The Government’s Help to Buy scheme is aimed at assisting buyers in getting on, or moving up, the housing ladder. It is also targeted at stimulating supply growth as homebuilders respond to higher prices. The CEBR did not include the impact of Help to Buy in their central house price forecast, because the scheme’s details have not yet been fully disclosed. However, they did formulate a back-of-the-envelope, stand-alone estimate of its likely impact on housing supply and prices over next few years.guaranteed rent
Darrell said: “Much of the reason for the increase in activity is first-time buyers feeling they have an option to get on the housing ladder with Help to Buy. It is no coincidence that developers and builders seem happier and they are already positive about new developments. I am certain things will continue to improve.”
In 2014, CEBR estimate that the scheme could raise prices by up to 0.8 per cent without having any appreciable impact on housing supply. In 2015, they expect that homebuilders will respond to the higher prices which the scheme brought about in 2014. This means that in 2015, the Help to Buy scheme could lead to an additional 4,800 homes being built.
Daniel Solomon, CEBR economist and main author of the report Darrell refers to, said: “By 2018, we expect the typical UK home will cost £267,000 – over 20 per cent more than this year. Gradual wage and population increases will be the fundamental drivers of this medium-term trend.”
This is news supported by Charles Barnard Estate Agents.
Darrell said: “Everyone has been waiting for first-time buyers to become active and this latest scheme from the Government is exactly what we and clients waiting to come to the market have been waiting for.”
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