Economic optimism for 2014 as house prices rise nationally
By Derby Telegraph
House prices are expected to rise by up to 8% in 2014 as the economic improvement continues.
WHAT will happen to house prices in 2014?
Recent data has been released indicating that house prices rose by an average of 8.4% across the UK in 2013, with the average house price now standing at £175,826. Prices rose in all regions of the UK, indicating that the economic recovery has started to build nationally, allaying initial fears that it was concentrated in London and the South East.
Although the average property price remains 5% below the 2007 peak, November mortgage approvals were the highest for nearly six years, indicating the strength of the recovery.
Overall, the economy has improved significantly in recent months, with annual growth data (GDP) for the UK well above all new year expectations, and the stock market indices performing strongly.
Additionally, we are experiencing a combination of falling levels of unemployment, a lowering of monthly inflation numbers and a rise in GDP growth, with another strong figure expected for the final quarter of 2013.
In a normal market, this combination would usually lead to a rise in interest rates, but markets, businesses and individuals have been advised that under the "forward guidance" regime, interest rates will not rise until the economic recovery is more assured. This is not expected to happen before 2015.
Local mortgage market
The supply and spread of mortgage availability has grown steadily and there is currently an excellent range of products with good levels of affordability, due to a combination of low, stable interest rates and Government lending schemes, which have contributed to the improved market in recent months.
Although housing transaction volumes are still lower than pre-credit crunch levels, activity is rising and the improved economic outlook should continue to feed through to the housing market in 2014. The market is offering good support to first-time buyers, investment buyers and existing owners wishing to move.
Year end surveys have indicated that prices are expected to rise by up to 8% in 2014 as the economic improvement seen in recent months continues. Interest rates are expected to remain unchanged and this should allow business and consumer confidence to build. This will lead to improved pay awards and utilisation of spare capacity. As individuals feel more secure in their jobs and earnings levels increase, this should feed into housing market activity and boost market sentiment.
I hope the improved level of economic optimism will prove to be justified and that we are finally seeing "daylight at the end of the tunnel" after a long period of austerity.