Property agents Chesterton Humberts is predicting that prices in Greater London will not soar ahead and see growth of 8.1% while elsewhere they could rise 8.2%. The firm says that various government initiatives will ensure that affordability remains manageable.
Overall it says that national house prices will average 6% per annum growth over the next five years giving total growth of almost 30%, but believes that this growth will be sustained until at least 2016 by mortgage support schemes which prop up the lending market by allowing cheap mortgage credit and enabling more people to buy.
‘2013 marked the beginning of a recovery in the UK housing sector and I expect strong house price growth to continue throughout this year. However, I do not believe we will enter bubble territory as achieved price growth to date outside London has been modest and is sustainable for the time being thanks to the various government mortgage support schemes,’ said Nick Barnes, head of research at Chesterton Humberts.
‘Moreover, mortgage interest rates are likely to remain low at least until the General Election meaning that affordability should stay manageable for most households and current affordability measures from the Nationwide and Halifax are some way below, i.e. better, than the worst periods of the last big recession in the 1980s and early 1990s,’ he pointed out.
Chesterton Humberts also expects the North/South regional divide to persist in the New Year, as London, the South East and East Anglia continue to outperform the rest of the UK. The prime London market alone is predicted to achieve an average of 9.7% annual growth between 2014 and 2018. This represents a 48.5% increase over the next five years.
Meanwhile, the County Homesearch company has 17 offices in the UK, see prices and activity increasing in the South East as buyers are prices out of the London market.
‘I predict that Sevenoaks, Tunbridge Wells and Brighton will benefit from this trend. A cosmopolitan atmosphere, good schools and easy commute back to the capital make them serious contenders,’ said Sue Carne, director of the County Homesearch Company’s Kent and Sussex office.
Colleague Andreas Bonney, director of the East of England office, said that 2013 saw a marked increase in activity in the East of England in terms of buyer interest.‘Several clients have said that they want to buy this year before prices rise and whilst they can still obtain low mortgage deals. Supply is the problem, especially in places where people most want to buy such as Cambridge, Saffron Walden, Harpenden and St Albans,’ he explained.
‘I recently met someone who was submitting a sealed bid on a property in Cambridge. It was on the market at £1.3 million but achieved £1.8 million. Local agents also reported an upsurge in buyer enquiries, especially during September when buyers took advantage of the end of season atmosphere generated by vendors motivated to sell before the end of 2013,’ he added.
He predicts that this year seems likely to see further movement in buyer interest as house price rises and the possibility of base rate rises is debated more in the press.‘However I think supply will remain a problem. An upwardly mobile housing market is good for upsizers who can still buy that big house for a reasonable price, but owners of those same houses who have managed to hang on to them through the dark years seem unlikely to sell now when prices are on the up,’ he said.
Diane Howie, director of the firm’s London office, believes that the city is in the middle of a property bubble. ‘A lack of stock and a glut of desperate buyers is forcing prices up beyond realistic levels. There are no signs that this will change in the foreseeable future,’ she said.
According to Carol Peett, director of the West Wales office, her region did begin to improve during 2013 compared to the previous three years with prices stabilising and beginning to rise slowly despite a plentiful supply of properties. ‘The buy to let market saw a marked increase in activity as did pockets of prime property, particularly on the South Pembrokeshire and South Ceredigion coasts,’ she said.
She predicts that activity will increase considerably in 2014 in all sectors of the market with prices increasing in the second half of the year at a rate of between 2% to 4%. ‘Demand for second homes, which had almost disappeared over the past three years, started to pick up slowly in the second half of 2013 and I believe this sector of the market will regain popularity, along with an increase in demand for agricultural land,’ she pointed out.
While in Surrey prices have been affected by the stamp duty changes which have impacted on the £2 million plus sector of the market, according to Harriet Holden-White, director of the firm’s Surrey office.
‘If things continue as they are now, there is not likely to be a great deal of choice for buyers, as vendors are still waiting for the right moment to sell. In my opinion there are quite a lot of over priced properties in Surrey where vendors are prepared to sit and wait rather than accept an offer below their asking price,’ she said.
‘Buyers looking to house price data or forecasts need to look at the number of transactions at the various price levels to get a true picture. If only a small number of sales have completed, it could be misleading to use that data to gauge correct pricing or claim that it represents a market recovery. In fact, a rise in local prices means very little unless there is volume of sales to shore it up,’ she explained.
She also pointed out that in Surrey in 2013 there was a real shortage of rental property at the £5,000 per month level. ‘There have been more properties available in the higher price brackets, but we have seen fewer corporate budgets coming through at the £8,000 to £20,000 per month level than previously,’ she added.
