House prices in the UK will rise by almost a fifth over the next five years, a leading agent has said, though it should not be taken as a sign that the market is returning to a boom-and-bust philosophy.
Estate agents Savills has predicted that house prices will rise by 3.5% in 2013, and by around 18% over the next five years.
The net effect, then, would be for prices to rise roughly in line with inflation rather than continuing to fall in real terms.
It will remain a regional picture, however, with prices expected to rise by 6% in London – more than double the current rate of inflation.
The new predictions are a marked shift in the agent’s previous predictions, which suggested that prices would remain relatively unchanged this year.
Savills pointed to a month-on-month improvement to the market conditions. "There are now more positive indicators than at any point over the past few years," it said.
Figures from the Council of Mortgage Lenders (CML) show that gross mortgage lending increased by a quarter between June 2012 and June 2013 – to its highest estimate since October 2008.
The Help to Buy Scheme has provided a catalyst to the market that still remains “only partially functioning”, suggests Lucian Cook, the director of Savills’ residential research.
"Help to Buy goes further than any of its predecessors in being aimed at all buyers, not just first time buyers," he said.
However, he added that it was important to see the rise in context, and not to leap to assumptions that the government was provoking another housing boom.
"While the combined package of Help to Buy measures could add 400,000 transactions over the next three years or so, they would still remain 24% below pre-crunch levels.
"Its launch into an improving market has triggered concerns that the Government will provoke another bubble. In our view, these are overstated given the conditions which attach to the scheme."
James Booker
Which4U
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