Another year has rolled to a conclusion, which means that it’s time to start indulging in the annual ritual of “prediction frenzy.” When it comes to trying to get an idea of the future movements of the property market, the predictions we make now have a particular importance.
The housing market is a fundamental component of the wider UK economy. The last period of continued economic growth was built on the back of remarkable boom in house prices, matched only by Spain in terms of the scope of the rise.
The realisation that this rise was built on unsustainable foundations led to a painful readjustment process that dragged the rest of the economy down with it.
The years since 2008 have seen turbulence in the housing market, but this year saw the beginnings of a return to stability and rises in house prices across the whole of the UK.
So, will 2014 be the year when the UK housing market really begins to regain some of its former vigour, or are there a few more plot twists waiting for us in the wings?
Here are eMoov’s big predictions for 2014.
House Prices on the Rise… There is a consensus amongst analysts that 2014 will see fairly hefty rises in house prices across the board. There is, however, disagreement over the predicted scale of those rises.
Forecasts by the Centre for Economics and Business Research (CEBR) show that average house prices in the UK will be 2.3% higher than their 2007 peak and around 1.4% higher than 2012 at £222,000. This picture is likely to be a mixed one geographically if current trends continue. The Office of National Statistics has released figures that while prices in London are up 9% on last year and as a whole England is slightly above its 2008 peak, prices still remain below their previous highs in Wales, Scotland and Northern Ireland.
There are also predictions that put the rate of house price growth much higher. Many people think that growth is likely to keep pace with the 6% and 7.7% growth rates reported this year by Nationwide and Halifax respectively. A whole gaggle of estate agents have been eager to plant their flag at a 7% growth rate in prices, with central London far outpacing the rest of the country.
This is all broadly in line with the big predictions about where the UK economy is heading. The Institute of Fiscal Studies expect the economy as a whole to grow at a hardly show-stopping, but still better than nothing 1.9% next year, while the IMF puts it at a more modest 0.9%. The point being that most analysts are united in believing that house prices are going to begin to rise in 2014.
Following on from the rise in prices, there is also a predicted rise in property transactions. As the economy begins to return to health and house prices begin to rise, people are going to be looking to move forward with the sale of their properties. Many people are also likely to be looking to buy new properties now before the prices are seen to rise further.
This is good news for all of our potential new customers in the New Year, and we are looking forward to helping as many people as we can take advantage of a market returning to health.
Any marketplace is built upon an essential bedrock of consumer and merchant confidence. Confidence in the property market is what is going to convince a person that now is the time to put their hard earned money on the table and make an offer on a property, and is something that has unfortunately been in short supply in the last couple of years.
Sign up with us in the New Year and get your house on the market.
Demand Continuing to Outstrip Supply
Part of the rise in house prices may be tied up to the idea of the continued outpacing of demand to supply. The Royal Institution of Chartered Surveyors continues to think that the lack of new builds will mean that the supply of houses for sale will continue to fall “well short” of demand. This lack of demand is a particularly pronounced issue in London, but is also prominent to different degrees across the country.
This is going to add further upward pressure to house-buying process in the coming year, which means that those people who are looking to sell their home shouldn’t struggle too hard to generate some interest. If we get your property up on our extensive list of partner sites, the wider market conditions should mean that your property begins to get a lot of interest quickly.
The Extension of the Help to Buy Scheme
Another factor that is going to have noticeable effect on the housing market in 2014 is going to be the extension of the Government Help to Buy Scheme.
The scheme is designed to assist people who want to take their first, determined steps onto the property ladder but are struggling to come up with a big enough deposit. The original pilot phase of the scheme began in England and saw the government offering a 20% equity loan to buyers who could stump up a 5% deposit for new builds.
The second phase of this scheme was originally due to be rolled out in the first month of 2014, but has been brought forward. In this version, buyers still only have to put down a 5% deposit, with the lender providing a mortgage for the remaining 95%, 15% of which will be guaranteed for 7 years by the government. The scheme is aimed primarily at first-time buyers, but home movers can also apply, as long as the home they are moving to is going to be their sole residence.
Dr Christian Hilber form the London School of Economics predicts that one of the major effects of this scheme in the coming year is likely to be rise in house prices. The reason behind this judgement is that while the scheme will likely increase the availability of mortgages and encourage more people to try and enter the housing market, it does nothing to incentivise people to build more homes. This is likely to lead to a short term spike in house prices.
This is another sign that points towards 2014 being a great year to sell your house.
The Continued Growth in Popularity of Online Estate Agents
2014 will also see more and more people eschewing high-street estate agents in favour of their online counterparts. As word continues to spread of the substantial savings that can be made, this is a trend that is likely to continue to grow in prominence.
Research commissioned by eMoov and carried out by Ipsos Mori in June of this year; found that over half of people in the UK are simply unaware that an online alternative to the high fees of traditional high-street estate agents even exists. The best way that we can change this perception is by offering the best service we possibly can, so that our customers recommend us highly to the people they know.
2014 is looking to be a year that is going to be significantly brighter in terms of selling homes, with several market factors acting to push both prices and demand up, while more and more people will realise that they can make significant savings, if they sell their homes online.
Here at eMoov we are really excited about what the New Year holds and the opportunity to help as many people as we can to pursue their dreams.
What do you think that 2014 holds for the UK property market?