Prospects for London and mortgage rates key to market outlook in 2014
Resurgent demand and dwindling supply have been the defining themes of the housing market in 2013 says Hometrack.
While demand for housing grew at 25 percent over the year, its fastest rate for 3 years, supply of housing for sale increased by only 6 percent, which is the lowest on record says the residential property insight firm.
Hometrack went on to say that while 2012 may have seen average house prices eroded by 0.3 percent but 2013 saw a rebound with average prices increasing by 4.4 percent.
House prices also remained strong in the December lull. Demand did fall off as it always does in the run up to Christmas but prices still managed to go up by 0.5 percent over the month.
Hometrack puts the strong performance down to:
• low mortgage rates
• pent-up demand
• general good news about the UK economy
• the government's Help to Buy scheme
15 percent of postcodes saw a price drop and ten percent maintained their prices showing that some parts of the country still had a fragile housing market said Hometrack.
Unsurprisingly London and the South East registered the highest growth in 2013. London prices rose 9.1 percent and the South East by 5 percent.
The continued growth in house prices into 2014 relies on three factors says Hometrack:
• whether the increase in demand can be sustained
• whether the strength of growth in the London market can be sustained
• the outlook for mortgage rates
"We expect the momentum in house price growth to spill over into 2014," Hometrack said "supported by a continued lack of supply and rising demand. The strongest market conditions and impetus for price inflation is set to remain focused on southern England in 2014. A broader based recovery in the housing market is dependent upon growth in the real economy, jobs and household incomes."