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.”