2014 is set to be ‘the year’ for UK house prices, if recent figures are anything to go by. UK homes will exhibit an 8% growth in value this year due to the continuing demand-supply mismatch, the Royal Institute of Chartered Surveyors (RICS) has predicted.
The RICS believes that house values will maintain their growth momentum this year, amidst soaring demand for residential property and the inventory crunch. This imbalance will continue to be the biggest obstacle that potential buyers will have to overcome in 2014 since they will, as they did last year, have less property to choose from.
The surveyor expects the number of property deals to grow to 1.2 million this year from 1.05 million in 2013. Despite the rise, however, the number will be still below the record 1.67 million transactions recorded in 2006, RICS noted.
2014 will also see a strong uptick in housing starts, which will jump to 155,000 from 125,000 in 2013. The improvement will be dictated by house builders’ desire to respond to the growing demand. The revival in development activity will be reassuring but not significant enough to offset the major imbalance that exists between demand and supply, unless it is sustained for several years, RICS said.
In 2013, the UK housing market saw a 5% lift in prices, driven by government initiatives such as Help to Buy and Funding for Lending, which stimulated mortgage lending and boosted demand from new buyers. But the brisk surge in home values has stoked fears of another housing bubble. The Bank of England tried to alleviate such concerns last month, announcing it would no longer cover new housing loans provided by lenders under the Funding for Lending from 2014, focusing only on increasing loans to businesses instead.
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