No Property Bubble Expected?

Chesterton Humberts is forecasting that national house prices will rise by up to 8.2% in 2014, ahead of a predicted 8.1% rise in Greater London, but said it did not think there would be a property bubble in the short term due to various government initiatives which will ensure that affordability remains manageable.

The property expert is predicting that national house prices will average 6% per annum growth over the next five years (total growth of almost 30%) but believes that this growth will be sustained until at least 2016 by mortgage support schemes which prop up the lending market by allowing cheap mortgage credit and enabling more people to buy.

Nick Barnes, head of research at Chesterton Humberts, said: “2013 has marked the beginning of a recovery in the UK housing sector and I expect strong house price growth to continue throughout next year. However, I do not believe we will enter bubble territory as achieved price growth to date outside London has been modest and is sustainable for the time being thanks to the various government mortgage support schemes.

“Moreover, mortgage interest rates are likely to remain low at least until the General Election meaning that affordability should stay manageable for most households and current affordability measures from the Nationwide and Halifax are some way below – i.e. better – the worst periods of the last big recession in the 80s/early 90s.”

Chesterton Humberts also expects the North/South regional divide to persist in the New Year, as London, the South East and East Anglia continue to outperform the rest of the UK. The prime London market alone is predicted to achieve an average of 9.7% annual growth between 2014 and 2018. This re-presents a 48.5% increase over the next five years.

%d bloggers like this: