This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/money/2013/jul/06/house-prices-up-experts-predictions

The article has changed 7 times. There is an RSS feed of changes available.

Version 0 Version 1
House prices up 4% – did anyone predict this rise? House prices up 4% – did anyone predict this rise?
(7 days later)
Look back at predictions for the housing market in 2013 and several words appear again and again: "flat", "static" and "treading water" were among the terms favoured by estate agents, lenders and other property market commentators. Most agreed that if there was growth, it would be 2% at most.Look back at predictions for the housing market in 2013 and several words appear again and again: "flat", "static" and "treading water" were among the terms favoured by estate agents, lenders and other property market commentators. Most agreed that if there was growth, it would be 2% at most.
But six months on, their forecasts look shaky: Nationwide's June house price index showed that in the first half of the year the average price of a UK home rose by 4%, or more than £1,000 a month, from £162,262 at the end of December to £168,941 at the end of June. Halifax's latest data revealed a near-3% rise in six months from £163,256 to £167,984.But six months on, their forecasts look shaky: Nationwide's June house price index showed that in the first half of the year the average price of a UK home rose by 4%, or more than £1,000 a month, from £162,262 at the end of December to £168,941 at the end of June. Halifax's latest data revealed a near-3% rise in six months from £163,256 to £167,984.
Figures from banks and building societies, meanwhile, show a considerable uptick in lending boosted by two government initiatives: Funding for Lending, launched in August 2012 to improve mortgage availability; and the first part of the Help to Buy scheme, offering equity loans on newly built homes, which went live in April. By most measures it seems confidence is returning to the market.Figures from banks and building societies, meanwhile, show a considerable uptick in lending boosted by two government initiatives: Funding for Lending, launched in August 2012 to improve mortgage availability; and the first part of the Help to Buy scheme, offering equity loans on newly built homes, which went live in April. By most measures it seems confidence is returning to the market.
You could argue that a lot of the growth is in London, and you would be right. But it is not just the capital that has seen double-digit rises: Land Registry figures show that in Blaenau Gwent in Wales prices increased by 11.8% between January and May to an average of £80,712. Other areas seeing strong increases included Darlington, where average prices were up by 5.7% in the first five months of the year, and Bridgend, where they rose 3.9%.You could argue that a lot of the growth is in London, and you would be right. But it is not just the capital that has seen double-digit rises: Land Registry figures show that in Blaenau Gwent in Wales prices increased by 11.8% between January and May to an average of £80,712. Other areas seeing strong increases included Darlington, where average prices were up by 5.7% in the first five months of the year, and Bridgend, where they rose 3.9%.
Only in London have prices returned to the level they were at before the slide began in 2007 – in fact, they have surpassed it by 5%, according to Nationwide, while across the UK as a whole they are still 9% below their pre-crisis peak. Headline growth figures mask significant regional variations and price falls – but it was the national picture the industry was forecasting, and that so far seems to be wide of the mark. So have they changed their tunes?Only in London have prices returned to the level they were at before the slide began in 2007 – in fact, they have surpassed it by 5%, according to Nationwide, while across the UK as a whole they are still 9% below their pre-crisis peak. Headline growth figures mask significant regional variations and price falls – but it was the national picture the industry was forecasting, and that so far seems to be wide of the mark. So have they changed their tunes?
HalifaxHalifax
The bank said in December that prices were likely to end 2013 "close to where they begin", and forecast anything between a 2% fall and a 2% rise. The mortgage lender's chief economist, Martin Ellis, now admits that the rate of house price inflation may exceed that by the end of the year, although he says he has no imminent plans to formally change his forecast.The bank said in December that prices were likely to end 2013 "close to where they begin", and forecast anything between a 2% fall and a 2% rise. The mortgage lender's chief economist, Martin Ellis, now admits that the rate of house price inflation may exceed that by the end of the year, although he says he has no imminent plans to formally change his forecast.
He says the stronger than anticipated growth was the result of numerous factors: signs of improvement in both the economy and housing market have boosted confidence, a shortage of properties for sale, and the Funding for Lending and Help to Buy schemes. "Nonetheless, the market still faces substantial headwinds with, for example, house prices remaining above the historical average in relation to earnings," he says. "Such factors are likely to prevent a sharp further acceleration in house prices and the most likely outlook is for house price inflation to remain relatively subdued."He says the stronger than anticipated growth was the result of numerous factors: signs of improvement in both the economy and housing market have boosted confidence, a shortage of properties for sale, and the Funding for Lending and Help to Buy schemes. "Nonetheless, the market still faces substantial headwinds with, for example, house prices remaining above the historical average in relation to earnings," he says. "Such factors are likely to prevent a sharp further acceleration in house prices and the most likely outlook is for house price inflation to remain relatively subdued."
The Royal Institution of Chartered SurveyorsThe Royal Institution of Chartered Surveyors
Rics forecast a 2% rise in prices over the course of 2013. Simon Rubinsohn, Rics chief economist, was optimistic about the impact of Funding for Lending, but felt the uncertain outlook for the economy would keep a lid on prices. "As it turns out, Funding for Lending has been increasingly effective in lowering the cost of secured lending while increasing the availability of housing-related loans," he says now. "On top of that, economic newsflow has strengthened a little more than envisaged, and the government has also introduced Help to Buy." As a result, he says the 2% headline forecast appears to be "on the low side", and Rics is set to push this up "to the 4% area".Rics forecast a 2% rise in prices over the course of 2013. Simon Rubinsohn, Rics chief economist, was optimistic about the impact of Funding for Lending, but felt the uncertain outlook for the economy would keep a lid on prices. "As it turns out, Funding for Lending has been increasingly effective in lowering the cost of secured lending while increasing the availability of housing-related loans," he says now. "On top of that, economic newsflow has strengthened a little more than envisaged, and the government has also introduced Help to Buy." As a result, he says the 2% headline forecast appears to be "on the low side", and Rics is set to push this up "to the 4% area".
NationwideNationwide
The building society's chief economist, Robert Gardner, said at the start of the year that he expected the housing market to "be characterised by low levels of activity" in 2013, "with prices remaining flat or modestly lower". He admits growth "has been a little stronger than we might have expected", but at 1.9% – the current annual rate of price growth – it is not far from his prediction, and cautions that a higher figure than that in July would be a result of prices falling in the same month last year. As for the rest of 2013, Gardner says: "We knew Funding for Lending and Help to Buy would provide support for the market, but if things like employment and wages pick up, they could lead to things being stronger than expected." Housing supply will be key, he says, and there are few signs that it is improving: new-build completions for England were down by 8% in the first part of the year. "If we get more demand but no more supply then there is a danger that will push up prices further," he says.The building society's chief economist, Robert Gardner, said at the start of the year that he expected the housing market to "be characterised by low levels of activity" in 2013, "with prices remaining flat or modestly lower". He admits growth "has been a little stronger than we might have expected", but at 1.9% – the current annual rate of price growth – it is not far from his prediction, and cautions that a higher figure than that in July would be a result of prices falling in the same month last year. As for the rest of 2013, Gardner says: "We knew Funding for Lending and Help to Buy would provide support for the market, but if things like employment and wages pick up, they could lead to things being stronger than expected." Housing supply will be key, he says, and there are few signs that it is improving: new-build completions for England were down by 8% in the first part of the year. "If we get more demand but no more supply then there is a danger that will push up prices further," he says.
The Centre for Economics and Business ResearchThe Centre for Economics and Business Research
The CEBR predicted prices would rise by 0.8% in 2013 to an average of £219,000. It revised that up to 1.4% in April and is just about to make a "small upward revision", although at the time of writing it wouldn't disclose exactly how much.The CEBR predicted prices would rise by 0.8% in 2013 to an average of £219,000. It revised that up to 1.4% in April and is just about to make a "small upward revision", although at the time of writing it wouldn't disclose exactly how much.
Its economist Daniel Solomon says there are four reasons for the revision: previous forecasts had not taken into account Help to Buy; the Office for National Statistics house price estimates over the last quarter were marginally higher than CEBR had expected; the general economic environment had improved; and the depreciation in the pound this year was making UK houses in prime London more affordable for foreign buyers.Its economist Daniel Solomon says there are four reasons for the revision: previous forecasts had not taken into account Help to Buy; the Office for National Statistics house price estimates over the last quarter were marginally higher than CEBR had expected; the general economic environment had improved; and the depreciation in the pound this year was making UK houses in prime London more affordable for foreign buyers.
Solomon says that as there had been nothing like Help to Buy before, it made it hard to judge what effect it might have. Although only one part of the scheme will be in place this year, he says "the expectation of the mortgage guarantee element next year could improve confidence", which could in turn push up prices.Solomon says that as there had been nothing like Help to Buy before, it made it hard to judge what effect it might have. Although only one part of the scheme will be in place this year, he says "the expectation of the mortgage guarantee element next year could improve confidence", which could in turn push up prices.
Knight FrankKnight Frank
The upmarket estate agent, was talking late last year of the longest housing market recovery on record, and predicted a 1% fall in prices this year. In June it revised its forecast upwards, saying Help to Buy had already improved buyer confidence, along with the prospect of continued low interest rates. "We see prices rising by 3% this year, just slightly above inflation," says head of UK residential research, Gráinne Gilmore.The upmarket estate agent, was talking late last year of the longest housing market recovery on record, and predicted a 1% fall in prices this year. In June it revised its forecast upwards, saying Help to Buy had already improved buyer confidence, along with the prospect of continued low interest rates. "We see prices rising by 3% this year, just slightly above inflation," says head of UK residential research, Gráinne Gilmore.
SavillsSavills
Estate agent, predicted a 0.5% increase across the UK in 2013. Six months in, Lucian Cook, director of residential research, says prices could rise by up to 5% this year. "There are signs of improved sentiment. For example, the Rics survey shows a big uptick in new-buyer inquiries and a gap between that and supply. When that happens, prices are pushed up," he says. Cook says some of that growth in appetite by new buyers has yet to feed through into prices, which means they are likely to be sustained into the second half of the year. He says he expects to revise his five-year forecast up, "not least because of the second part of Help to Buy" which launches in January 2014 and will see lenders offered a guarantee on large loans. However, he says some of the growth may be "jam today". "There is an affordability constraint that will kick in that will prevent people getting mortgages if prices go up too much."Estate agent, predicted a 0.5% increase across the UK in 2013. Six months in, Lucian Cook, director of residential research, says prices could rise by up to 5% this year. "There are signs of improved sentiment. For example, the Rics survey shows a big uptick in new-buyer inquiries and a gap between that and supply. When that happens, prices are pushed up," he says. Cook says some of that growth in appetite by new buyers has yet to feed through into prices, which means they are likely to be sustained into the second half of the year. He says he expects to revise his five-year forecast up, "not least because of the second part of Help to Buy" which launches in January 2014 and will see lenders offered a guarantee on large loans. However, he says some of the growth may be "jam today". "There is an affordability constraint that will kick in that will prevent people getting mortgages if prices go up too much."
RightmoveRightmove
The property website, said "the slow recovery" would continue through 2013, forecasting a 2% rise in asking prices in England and Wales over the year, assisted by greater competition among lenders. In its latest house price report it says that across England and Wales asking prices have risen by 10.4% in the first six months of the year. Every region has seen growth, from the East Midlands up by 5.8%, to the south-east where sellers are asking for 14.8% more than at the start of the year.The property website, said "the slow recovery" would continue through 2013, forecasting a 2% rise in asking prices in England and Wales over the year, assisted by greater competition among lenders. In its latest house price report it says that across England and Wales asking prices have risen by 10.4% in the first six months of the year. Every region has seen growth, from the East Midlands up by 5.8%, to the south-east where sellers are asking for 14.8% more than at the start of the year.
Its director, Miles Shipside, says he now expects asking prices to end the year up 4%.Its director, Miles Shipside, says he now expects asking prices to end the year up 4%.
What do you think will happen to house prices in 2013?What do you think will happen to house prices in 2013?
Top mortgagesTop mortgages
Chelsea Building SocietyChelsea Building Society
HSBC Chelsea Building Society
HSBCHSBC
Provided by London & Country for the GuardianProvided by London & Country for the Guardian