Housing market predictions 2013: a review
Experts doubt a recovery in prices is likely over the next 12 months
January 9, 2013
A general consensus has formed among housing market experts that 2013 will not bring the long awaited housing market recovery. Despite the crash beginning almost six years ago in 2007, the continuing woes of the economy mean that house prices and home ownership are set to remain in the doldrums. This is despite surging prices in London and the South East where foreign investors are not only propping up the market but, in desirable locations, are causing a seemingly relentless increase. This must always be remembered when discussing house price indices as the reality for most of the country is actually grimmer than the overall picture suggests.
The UK’s largest mortgage lender, Halifax, predicts prices will remain stagnant with a range between a two per cent drop and a two per cent rise. Martin Ellis, chief housing economist at Halifax said “We expect continuing broad stability in house prices nationally in 2013 with prices likely to end the year at levels close to where they begin.” Rightmove, the property listings website, is slightly more positive claiming a two per cent rise over the next twelve months.
Some commentators are more brazenly optimistic. Assetz, a property investment company, has predicted a five per cent rise in prices. This is predominantly due to the Funding for Lending scheme launched in August by the Bank of England which allows banks to borrow cheap money in a bid to get them lending to prospective home buyers. So far the evidence suggests that the scheme has been reasonable successful with net lending up by almost £500 million over the first four months of the scheme. However, the broad consensus is that growth of five per cent is more like wishful thinking and we should not expect much of a rise in 2013. In fact once inflation is taken into account real house prices are likely to decline.