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An air of optimism returns to the Great British property market in 2013
January 31, 2013Article by Ray Withers
The start of 2013 has seen a plethora of predictions on what will or will not happen in the British economy in general and more particularly the housing market. Optimism abounds from all corners. According to the Knight Franks and Markits house price sentiment index, home owners in 11 UK regions expect the value of their home to go up in the next 12 months.
Rightmove have shown that average asking prices have continued to increase, up 2.4% year on year, and Zoopla has revealed that homeowners are far more confident now than at this time last year, with 65% expecting prices to rise in the next six months by 3.25% on average.
Indeed RICS remain confident that house sales across the UK will increase during the first quarter of 2013, with the majority of chartered surveyors considering that we are definitely over the worse of the housing crisis.
Hometrack’s monthly survey has also shown that although the number of people looking for a new home by registering with estate agents dropped 9.9% over the last month, 79% of estate agents surveyed where extremely positive about the prospects of the housing market this spring.
But why is there this air of optimism?
A lot of attention has been placed on the Government’s launch of its Funding for Lending Scheme last August. After a slow start there are signs that the mortgage market is changing which should boost lending and increase house purchases. However, what percentage of these will be first time buyers remains to be seen as the scheme has dramatically reduced rates for savers, thus affecting those trying to save for their first home. Nether-the-less there were 932,000 completed mortgage transactions last year – a 5% increase on 2011 according to the HMRC. Out of these 220,000 where for first-time buyers – the highest level since the beginning of the credit crunch.
Analysis from the Halifax has shown that mortgages are now the most affordable they have been for 10 years and twice as cheap as at the height of the credit crisis. The key determining factor in all this may well be that lenders are now planning to increase their maximum loan-to-values rates. According to the Bank of England’s latest quarterly Credit Conditions Survey the availability of secured credit to households is the highest since 2007 and all the major of banks and buildings societies are planning to increase lending significantly over the next few months.
So what for the future?
I would expect prices to continue to creep up this year and then start to accelerate from 2014 onwards. With the Centre for Economics and Business Research predicting that a typical home will surpass the 2007 market peak during next year and in five years’ time be 20% higher than at present, then the UK property market is certainly not to be ignored.
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