Of course, without the aid of a crystal ball, it’s impossible for anyone to say exactly what will happen to house prices in 2014, but regardless of what lies around the corner, demand for property looks set to grow.
According to HMRC figures, activity has picked up over the past 12 months, with Stamp Duty transactions in 2013 likely to have exceeded one million for the first time since 2007. Home sales rose for the seventh successive month in November to 96,980 which is 24% higher than in November 2012.
The second part of the Help to Buy Scheme has already given many buyers a helping hand – nearly 750 homes have been bought since the mortgage guarantee scheme was launched three months ago – but will these people, and anyone hoping to join them, see property prices rise or fall this year?
We asked the experts for their property price predictions for 2014...
Clare Francis, editor-in-chief at MoneySuperMarket
“When it comes to the housing market confidence is key, and we’ve seen confidence pick up in recent months. This has been driven by a number of factors including low mortgage rates, an increase in the number of mortgages for those with small deposits, the government’s Help to Buy Scheme and a particularly strong market in London. This resulted in stronger than expected house-price growth in 2013 and it looks set to continue this year.
“However, as is always the case with the housing market, the situation varies significantly depending on where you are in the country. London is booming at the moment with demand outstripping supply and properties selling in a matter of days.
“This is making it very difficult for many first-time buyers there because there are so many people after the same properties and this demand is pushing prices up further. In other parts of the country though, it’s a completely different picture and there are properties for sale that have been on the market for months with little interest from buyers.
“I think confidence will pick up further this year which, along with the wider availability of mortgages, should help get things moving in the areas where the market remains subdued. Growth is likely to remain strongest though in London and the south east.”
Martin Ellis, housing economist, Halifax
"Mounting signs that economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence over the coming months. This will increase the likelihood that more people will consider buying a property in 2014, therefore supporting housing demand.
"Nonetheless, continuing pressures on household finances, as earnings again fail to keep pace with consumer price inflation, are expected to constrain demand. The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply. Indeed, our consumer confidence research shows that there has been a significant improvement in sentiment towards selling in recent months. These factors should help to curb the upward pressure on prices.
“We expect house prices to continue to rise this year, most likely at a broadly similar pace to 2013. Prices nationally are forecast to increase in a range of between 4% and 8% in 2014.”
Mark Harris, chief executive of mortgage broker SPF Private Clients
“2013 exceeded all expectations as far as the housing market was concerned and 2014 is likely to be even better. We expect house prices to rise by 8.5% in London during 2014 and 6.5% in the rest of the UK.
“Property prices will continue to edge up in London and the south east but further afield the situation is harder to call. The significant regional variations we saw in 2013 are likely to continue. Talk of a house-price bubble is nonsense; London may be performing well but prices are flat or even falling in other areas.
“Various schemes designed to stimulate the market such as Help to Buy will play a big part in boosting the market. First-time buyers in particular will benefit but this will flow up the chain, so it’s good news all round.
“We expect to see around £180bn of lending as both demand to borrow and appetite to lend, remain strong. We don’t expect interest rates to rise, despite unemployment falling faster than predicted and the economy recovering at a quicker rate. We are still in recovery mode and it’s unlikely that the Bank will risk raising interest rates too soon.”
Miles Shipside, director and housing market analyst at Rightmove
“Rightmove forecasts a rise in average new seller asking prices of between 6% and 8% in 2014. To help mitigate the upwards pressure on prices, it is important that homeowners who have a move on their minds make it a new year’s resolution to spring into action. After six years afflicted by the credit crunch, there’s a definite window to ‘move up or move on’ in 2014 before the market’s usual pre-election pause in early 2015.
“A plentiful choice of property for sale would limit sellers from getting over-ambitious with their asking prices and result in a national average increase closer to 6%. It would also give those who are buying a better chance of finding their dream home at a more affordable price.”
Ray Boulger, senior technical manager at Charcol
“Until Spring 2013 increases were primarily London centric, with prices in most other areas outside the South east either static or falling. However, price differentials between London and elsewhere have widened so much that I expect prices in most regions to increase broadly in line with London in 2014, with some probably outperforming London.
“Last year’s Autumn Statement announcement that foreigners will be subject to capitals gain tax from April 2015 when selling residential property is likely to result in some deciding to sell before then but the impact will be negligible outside London.
“The factors pushing up house prices will continue in 2014, with Help to Buy (HTB) being a bigger influence. After three years with little change in gross mortgage lending, the 2013 figure will be about £174bn, 22% higher than 2012. Lending will increase further in 2014, probably by a slightly smaller percentage, taking the total to £200bn.
Henry Pryor, independent housing expert
“2014 will be a year of two markets – one in the gravitational pull of London extending out beyond the M25 as far as Oxford and Cambridge. Here we will see house price inflation in the order of 8% with some pockets doing even better. Away for the south east, the housing market will remain as sticky as treacle with prices falling in real terms despite government efforts to ramp prices ahead of the General Election next year.
“Prices remain determined by the availability of credit. Lenders are going to find themselves under pressure from regulators to bring the bubble in the south east under control but this will make it much harder for ‘mere mortals’ to borrow more money to pay inflated prices away from the capital. Overall I expect house prices to end the year on average 5% higher.”
David Hollingworth, of mortgage broker London & Country
“Mortgage availability has improved enormously over the last year and looks set to continue. Very competitive mortgage rates are bound to build on the improved confidence in the housing market and already more are taking the plunge in buying their first property or making a move.
“Help to Buy has already increased the range of options and improved rates for those with small deposits. With other lenders such as Santander coming on stream, the competition should only be enhanced although borrowers will still need to demonstrate a good track record and that they can clearly afford the borrowing.
“The New Year therefore looks to start where the last one left off and prices are likely to continue to rise if supply fails to meet stronger demand. Possibly countering that will be whether implementation of the Mortgage Market Review will cause lenders to take their foot off and how funding costs might be affected by the withdrawal of the Funding for Lending Scheme for mortgages. Although I’d expect that only to be relatively slight mortgage rates could rise a little and some borrowers will have an eye on just when Base Rate may start to climb, even though that looks unlikely in the short term.”
Adrian Anderson, director of mortgage broker Anderson Harris
“We're quite bullish about the prospects for the housing market this year. We forecast that house prices will rise by around 6% across the country in 2014. London outperformed the rest of the UK in 2013 and we expect this to happen again, although the difference in percentage growth between London and the rest of the UK will not be so great.
“Growth in the first six months of the year is also likely to be greater than in the second half. The remainder of FLS money and the Help to Buy scheme will fuel demand for lower value properties in areas outside of London. Banks are also keen to lend a larger percentage of the property value and, as more borrowers can access the funds they need, this will push up property prices outside of London.
“Investors will still be keen to buy property rather than leave their money in cash or opt for stocks and shares. Good yields combined with the potential for capital growth will make buy-to-let an attractive option, while international money will continue to flow into London property.”
Read what the experts predicted would happen to house prices in 2013.