Next year will see continuing broad stability in property prices across the UK, according to forecasts, with the housing market set to make a slow but gradual recovery in the ensuing years.
The forecasts about the future shape of the property market in England and Wales come in Halifax’s UK Housing Market Outlook for 2013, which also outlined that London and the South East will continue to take the lead in terms of delivering the UK’s strongest property prices.
The report also revealed good news for both first-time buyers and homemovers, with favourable mortgage affordability supported by low interest rates.
According to Halifax, typical mortgage payments as a proportion of disposable income, at the long-term average loan to value ratio, has nearly halved since 2007, falling from 48% to 26% in the third quarter of 2012. This figure is also significantly below the average of 36% recorded over the past 27 years.
However, Halifax also predicted that the number of first-time buyers is likely to remain low by historical standards, as many struggle to gather the average 20% deposit needed for a home.
On a brighter note the report outlined that the Bank of England’s Funding for Lending Scheme is likely to “ease credit constraints, resulting in some improvement in mortgage availability in 2013.”
“House prices are likely to rise, albeit very slowly, beyond 2013 as the economic recovery strengthens. Economic growth, however, is likely to remain below long-term average pace for sometime as the household sector continues the lengthy process of rebalancing its finances and as the fiscal squeeze is maintained to bring the public finances under control,” said Halifax’s housing economist, Martin Ellis.
“This subdued economic background will constrain housing demand. Additionally, the continuation of the ratio of house prices to earnings above its long term average will also restrict demand, ensuring that any price growth is likely to remain modest over the next few years.”