Are we on the road to recovery?
John Elliott, Managing Director or Millwood Designer Homes, looks at the possible green shoots of recovery that could indicate that the property market may now be over the worst.
“Last year, we ended on a high. In December, residential property prices were up 3.4%, with the average price of a home £202,824, an increase of £6,634 since December 2011.
“Gross mortgage lending reached an estimated £11.7bn, bringing the estimated total for the year to £143bn, up from £141bn in 2011.
“In spite of the negativity and pessimism, 2012 saw the strongest calendar price growth for three years. So it is not surprising that there is confidence that we could see a price growth of as much as 5% this year, which would leave prices just shy of the 2007 peak and their highest since February 2008.
“In fact, property prices are expected to race ahead in the next two years, surpassing their pre-financial crisis peak for the first time in 2014.
“The Centre for Economics and Business Research has forecast that in five years' time a typical home will cost £261,000, representing an increase of 19.1 per cent compared with this year.
“Average prices this year are expected to edge up to £219,000, marking a 0.8 per cent increase compared with 2012, and by the end of 2014, a typical house in Britain will cost £223,000, 0.7 per cent higher than the 2007 peak.
“House sales are also set to rise this year, according to the latest Royal Institution of Chartered Surveyors housing market survey, with 24% more chartered surveyors predicting transactions to rise instead of fall over the first quarter of 2013.
“For the first time since June 2012, house prices stabilised in December, and RICS are predicting a more modest rise of 2% in 2013. In fact, there was no negative price outlook for the first quarter, which is really promising to hear.
“So it appears that 2013 is off to a good start. Rightmove reported that vendors increased asking prices by an average of 0.2% during the first two weeks of January, saying that it had seen the number of properties coming to market up 22% year-on-year, while traffic was up by 27% over the first two weeks of January. The weekly rate of new property listings was 11,153, apparently the highest level recorded at the beginning of a new year since 2008.
“As a result of improvements in the mortgage market (a study by Halifax has revealed that mortgages have dropped to their most affordable level for a decade and are currently almost twice as cheap as the height of the financial crisis), it is clear that confidence is growing, and as a result property prices are set to rise. This is particularly good news for anyone who bought around the peak of the market and have found themselves stuck with little or no equity in their home.
“I think a lot of people have held off moving over the last couple of years in the hope that the market will pick up, yet we have still seen positive signs proving the market to be incredibly resilient.
“There are some very strong indications that it will continue to pick up this year. I hope that people will view 2013 with more certainty and finally go ahead with the move that they have been putting off.”
Millwood currently has a range of properties in locations throughout Kent, Surrey and Sussex. For more information about any of the developments, visit millwooddesignerhomes.co.uk.