Property website, Rightmove’s latest report showed that across England and Wales asking prices were up by 10.4% in the first six months of the year. Photograph: Russell Boyce/REUTERS
Property market experts who as recently as December were predicting flat or even falling house prices this year are rapidly backtracking as evidence mounts that confidence has roared back into the housing market.
Price rises averaging up to 5% across the country are now forecast for the year – and causing consternation among would-be first-time buyers, who already face a struggle to save for a deposit. An increase of that size would add £8,100 by the end of the year to last December's average price of £162,000 recorded by the Land Registry.
Property website Rightmove will next week double its prediction for growth in asking prices this year to 4%, and the Royal Institution of Chartered Surveyors is poised to push up its forecast from 2% to "the 4% area".
High-end estate agent Knight Frank has reversed its forecast, saying that instead of a 1% fall in 2013 it expects prices could gain 3% by the end of the year.
Property market experts who as recently as December were predicting flat or even falling house prices this year are rapidly backtracking as evidence mounts that confidence has roared back into the housing market.
Price rises averaging up to 5% across the country are now forecast for the year – and causing consternation among would-be first-time buyers, who already face a struggle to save for a deposit. An increase of that size would add £8,100 by the end of the year to last December's average price of £162,000 recorded by the Land Registry.
Property website Rightmove will next week double its prediction for growth in asking prices this year to 4%, and the Royal Institution of Chartered Surveyors is poised to push up its forecast from 2% to "the 4% area".
High-end estate agent Knight Frank has reversed its forecast, saying that instead of a 1% fall in 2013 it expects prices could gain 3% by the end of the year.
Upmarket rival Savills said rises could be as much as 10 times the 0.5% it predicted at the start of the year.
At the beginning of the year forecasters including Hometrack and Nationwide predicted prices would fall.
Labour warned that home ownership was moving further out of reach for struggling first-time buyers and laid part of the blame on the chancellor,George Osborne, saying the Help to Buy schemes announced in his March budget were fuelling the rise in property values. Shadow housing minister Jack Dromey said: "The IMF, Office of Budget Responsibility and the Treasury select committee have all warned that the government's Help to Buy scheme will push up house prices but have limited impact on increasing badly needed affordable house building."
He added: "The truth is the government has failed to invest in building the affordable homes we desperately need and housebuilding has fallen to its lowest levels since the 1920s."
Rightmove's latest house price report showed that across England and Wales asking prices were up by 10.4% in the first six months of the year – growth in asking prices typically drops off in the second half of the year.
Rightmove director Miles Shipside said a number of factors had given the market a bigger boost than expected – the Funding for Lending scheme, launched last summer, which has made cheap Bank of England funding available to lending banks; signs of economic stability internationally and at home; and Help to Buy, which backs purchases of new-build homes with government money. "Barring a raft of bad economic news, we expect these factors to continue to impact positively on the market," he said.
The Halifax said this week that property prices were rising at their fastest rate for three years. Its data followed a Nationwide survey last week revealing a 4% rise in prices in the first six months and the Bank of England reported this week that mortgage approvals were at a three-and-a-half-year high.
But the market remains skewed towards London and the south-east, with Nationwide reporting at the end of last month that the gap between the capital and the rest of the country is the widest it has ever been. The average London home hit a record of more than £318,000, almost twice the level in the rest of the UK when London is excluded, Nationwide said. Chartered surveyors CBRE have calculated the area of London where properties are worth more than £1,000 per square foot is growing outwards at a rate of 350 metres a year.
That area includes Kensington Palace Gardens, which property website Zoopla last month identified as Britain's most expensive address, with an average residential property price of £36m.
At such prices, Zoopla calculated, the area taken up by a doormat is worth more than £3,500.
Zoopla also identified Virginia Water, on the Surrey/Berkshire border, as the first town in the UK with an average property price of more than £1m.
At the other end of the scale, in Stoke-on-Trent and Liverpool, the city councils have launched projects allowing people to buy derelict homes for £1, while in Ebbw Vale and Tredegar in south Wales, property websites list page after page of homes for sale at less than £50,000.
The boom in the capital has been driven by overseas money coming into the prime central London market as investors look for a haven for their cash. But there are also signs that some of the uncertainty in foreign economies is driving cash into less expensive parts of the capital.
Charlie Perdios, manager of estate agents Anthony Pepe, based in the north London suburb of Harringay, said he had heard from a number of Greek and Cypriot investors looking for buy-to-let properties in the area. "They're cash buyers – always cash – looking for a home for the money they have managed to get out of the banks."
The Help to Buy scheme has been so successful in boosting demand for houses and mortgages that builders and lenders have begun to worry about a new property bubble that could burst when the scheme ends. The boss of housebuilder Taylor Wimpey warned the government needed to plan for a "sensible withdrawal" of the scheme rather than pulling the plug on it "overnight". "There needs to be an exit plan," he said.
http://www.guardian.co.uk/business/2013/jul/05/help-t-buy-scheme-fuelling-housing-bubble
At the beginning of the year forecasters including Hometrack and Nationwide predicted prices would fall.
Labour warned that home ownership was moving further out of reach for struggling first-time buyers and laid part of the blame on the chancellor,George Osborne, saying the Help to Buy schemes announced in his March budget were fuelling the rise in property values. Shadow housing minister Jack Dromey said: "The IMF, Office of Budget Responsibility and the Treasury select committee have all warned that the government's Help to Buy scheme will push up house prices but have limited impact on increasing badly needed affordable house building."
He added: "The truth is the government has failed to invest in building the affordable homes we desperately need and housebuilding has fallen to its lowest levels since the 1920s."
Rightmove's latest house price report showed that across England and Wales asking prices were up by 10.4% in the first six months of the year – growth in asking prices typically drops off in the second half of the year.
Rightmove director Miles Shipside said a number of factors had given the market a bigger boost than expected – the Funding for Lending scheme, launched last summer, which has made cheap Bank of England funding available to lending banks; signs of economic stability internationally and at home; and Help to Buy, which backs purchases of new-build homes with government money. "Barring a raft of bad economic news, we expect these factors to continue to impact positively on the market," he said.
The Halifax said this week that property prices were rising at their fastest rate for three years. Its data followed a Nationwide survey last week revealing a 4% rise in prices in the first six months and the Bank of England reported this week that mortgage approvals were at a three-and-a-half-year high.
But the market remains skewed towards London and the south-east, with Nationwide reporting at the end of last month that the gap between the capital and the rest of the country is the widest it has ever been. The average London home hit a record of more than £318,000, almost twice the level in the rest of the UK when London is excluded, Nationwide said. Chartered surveyors CBRE have calculated the area of London where properties are worth more than £1,000 per square foot is growing outwards at a rate of 350 metres a year.
That area includes Kensington Palace Gardens, which property website Zoopla last month identified as Britain's most expensive address, with an average residential property price of £36m.
At such prices, Zoopla calculated, the area taken up by a doormat is worth more than £3,500.
Zoopla also identified Virginia Water, on the Surrey/Berkshire border, as the first town in the UK with an average property price of more than £1m.
At the other end of the scale, in Stoke-on-Trent and Liverpool, the city councils have launched projects allowing people to buy derelict homes for £1, while in Ebbw Vale and Tredegar in south Wales, property websites list page after page of homes for sale at less than £50,000.
The boom in the capital has been driven by overseas money coming into the prime central London market as investors look for a haven for their cash. But there are also signs that some of the uncertainty in foreign economies is driving cash into less expensive parts of the capital.
Charlie Perdios, manager of estate agents Anthony Pepe, based in the north London suburb of Harringay, said he had heard from a number of Greek and Cypriot investors looking for buy-to-let properties in the area. "They're cash buyers – always cash – looking for a home for the money they have managed to get out of the banks."
The Help to Buy scheme has been so successful in boosting demand for houses and mortgages that builders and lenders have begun to worry about a new property bubble that could burst when the scheme ends. The boss of housebuilder Taylor Wimpey warned the government needed to plan for a "sensible withdrawal" of the scheme rather than pulling the plug on it "overnight". "There needs to be an exit plan," he said.
http://www.guardian.co.uk/business/2013/jul/05/help-t-buy-scheme-fuelling-housing-bubble
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