Property prices in Britain will increase more than expected in the next five years according to official figures released by the Office for Budget Responsibility (OBR). These figures, which formed part of the Chancellor’s Autumn Statement, indicate that the cost of purchasing a house has been severely underestimated. The OBR is expecting prices to rise on average by 5.2% in 2014, 7.2% in 2015 and 10% in 2018 more than predicted.
The first forecast by Hamptons International in November 2013, indicated a transaction boom for 2014 and said that housing market activity would enjoy ‘double digit growth in the next three years.’ Economics Professor James Mitchell of Warwick University warns that most regions in the UK are already in a house price bubble, threatening falling prices, negative equity and a return to recession when interest rates rise. He said that 10 of the 13 regions in in the UK are currently overvalued compared to incomes. His warning came after recent calls by economists for the Bank of England to act now to stabilise the housing market.
The Council of Mortgage Lenders (CML) in their forecast in December2013 said that housing and mortgage markets look ‘set to continue to show greater levels of activity in 2014’ but has ruled out an uncontrolled housing boom. David Walton, Conveyancing Partner says, “They think that due to household finances being stretched and the likely future course of interest rates, housing market activity may well ease back of its own accord.”
For a free initial chat on any Conveyancing matter, please call 01202 499255 and David or a member of his team will be happy to discuss any questions that you may have.
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