In a move which will be music to the ears of investors in the UK property market, the U.K.’s largest mortgage lender Halifax has today issued a forecast for 2014. The company believes that property price growth in 2014 will be between 4% and 8% in line with 2013. This is a very different approach to the UK property market to that taken by Vince Cable who was today suggesting that the UK government may need to review its Help to Buy scheme. So what is going on in the UK property market and what does 2014 really hold?
So far this year, from January to the end of November, house price growth in the UK has been 7.4% with the average home now valued at just under £175,000. This is a significant increase from the £162,844 which the average UK home was worth at the beginning of 2013.
The future of the UK property market
Halifax has made a number of very interesting observations about the UK property market suggesting that not only will it be “same again” for UK property but the ongoing recovery will be more widespread. There is no doubt that the initial recovery step in the UK property market has been dominated by London where overseas investment continues to pour in and house prices continue to rise. Indeed, there is talk of rental yields falling to around 3% in some areas of London which is concerning although when you bear in mind UK base rates are currently 0.5%, perhaps we need to compare this on a like-for-like basis rather than historic?
Quote from PropertyForum.com : “Location is still the most important issue for the majority of UK house hunters with over 50% prioritising the location of their home over the size, according to new research.”
Even though there have been a number of reports published about the UK property market, the Halifax has the largest share of the UK mortgage market and is indeed seen by many as the leading light. So what else did the Halifax have to say about 2014?
No signs of over exuberance
Despite the fact that we have seen an array of concerns highlighting a potential “house price bubble” in the UK, the Halifax has not seen any of this so far. The company confirmed that there is “little current sign of the excessive behaviour associated with a house price bubble” which in layman’s terms means that the UK property market is not overheating. It will be interesting to see how widespread the recovery is in 2014 because this could potentially take some of the heat off London and the UK property market overall.
This also blows out of the water Vince Cable’s downbeat comments which many saw as an overreaction to the ongoing recovery in the UK property market. The UK government will be hoping for a more widespread recovery in 2014 which would set up the Conservative party perfectly for the next general election.
While we have seen a number of doom and gloom reports about the UK property market potentially overheating, this week’s comments from the Halifax have cast a very different light on the sector. The company believes it will be “same again” in 2014 and there are currently no signs of the over exuberance which could lead to a house price bubble. Whether this will give a boost to potential property investors remains to be seen but it is interesting to see a more balanced approach to the UK property market from a company “in the know”.