House prices forecast to return to pre-crash levels

UK house prices are set to surge in the coming years, according to forecasts from the Ernst & Young ITEM Club, with property values expected to make a gradual return to pre-crash levels.

Figures from the ITEM Club predict that house prices will climb by 2.1% in 2014, before soaring by 5% and 6% over the following two years.

Further forecasts include the fact that the number of housing transactions in 2013 will grow by 7.5% to reach 1 million.

This figure is set to be buoyed further in 2014 as a result of the government’s Help to Buy scheme, which allows buyers to snap up a new build home with a 5% deposit, which is also supported by a 20% government equity loan.

This initiative is set to see the number of housing transactions rise by a further 7.8% in 2014, to reach 1.08 million.

“With export markets continuing to disappoint, the chancellor has focused his firepower on the home front,” said Peter Spencer, chief economic adviser to the ITEM Club.

“And the timing couldn’t have been better. Real incomes are already starting to recover, mortgages are becoming more readily available, and homes are more affordable as the house price to earnings ratio continues to fall.”

The latest figures from the Council of Mortgage Lenders (CML) have shown that buyer activity is already beginning to pick up, with a 3% increase recorded in the number of first-time buyers in February.

The number of loans advanced to first-time buyers increased from 15,900 in January to 16,400 in February.

“First-time buyers are continuing to take advantage of more favourable market conditions, helping to drive the underlying trend for resilient house purchase lending,” said CML director general Paul Smee.

“We hope that the new initiatives announced by the government in the 2013 Budget will further stimulate first-time buyer activity but also help those ‘second steppers’  looking to move into a new or existing home.”

avatar
Posted by: Nicola Severn Categories: House Prices Tags: , , 7 Comments

7 Responses to House prices forecast to return to pre-crash levels

  1. avatar John Sherman says:

    Set to surge ?
    Boom and bust again, What lessons have been learnt by the previous boom and bust,NONE.
    Borrow until the cows come home

  2. avatar Miles Jepson says:

    I particularly like the comment…

    “And the timing couldn’t have been better. Real incomes are already starting to recover, mortgages are becoming more readily available, and homes are more affordable as the house price to earnings ratio continues to fall.”

    Where do they get this utter nonsense?

  3. avatar Unimpressedbythatnews says:

    Only one winner there. The treaury and the estate agents.

    Sleepwalking into a bigger, nastier version of 2008. Geniuses at the top they are. Mmmmmmm

  4. avatar Colin says:

    House prices are still way too high. I hope the Chancellor has not foolishly set in motion another boom (and bust) cycle.

  5. avatar Chris Longley says:

    Well said John.
    People never learn and now banks control the lending more strictly they can control the housing market pricing to their profit.
    Help to Buy Scheme = Sub Prime Mortgage Crash and you footing the bill.
    As long as austerity is here then prices wont rise. Job loses, capped wage increases and job insecurity will reign those price increases in.
    The Tories have failed on the economy as the benchmark was AAA rating and that has been reduced. Output and exports dont match the 25% devaluation of sterling since 2008. Normally this would spike exports. The government havent got to grips with the debt crisis……i.e. bedroom tax and benefits account for 3% of the expenditure whilst pensions are 48% and not being cut!
    I can imagine Gideon Osborne life being planned at the Bullingdon Club for so called greatness and his life aim was to be seen outside no11 with that red briefcase. Its all about Kudos!

  6. I’m sensing there may be a whole stream of reposessions about to rear their head as people borrow money without accounting for future Bank of England base rate rises pushing up mortgage interest rates and repayments… And the governments new scheme only encourages this!

  7. avatar Richard Thornhill says:

    It all depends on how many companies participate in the NewBuy scheme. Hopefully it can begin to help out first time buyers.