An estate agent has predicted house prices will jump by 12% over the next two years on the back of the Government’s Help to Buy scheme and the improving economy.
Knight Frank’s figures predict house prices will rise by 7% in 2014, followed by a more modest, yet still large by recent standards, rise of 5% in 2015. The figures are in stock contrast to previous predictions by the estate agent, which suggested house prices would fall by 2% in 2014.
According to the estate agent, London will lead the way, with growth in the capital expected to be above average at 8.4% next year.
Liam Bailey of Knight Frank, said: “For the first time in five years we can be broadly positive about the UK housing market. Price growth is encouraging transactions, contributing to labour mobility, and first time buyers are able to access the market in a way they couldn’t even 12 months ago.”
Turning to the dominance of the London market, Bailey said: “Importantly these improvements are not limited to London, they are spreading.”
Knight Frank also predicted that house prices will rise by 24% over the next five years.
The predicted rises are partly down to the improving economic climate, which has seen unemployment levels falling and the Governor of the Bank of England saying this week that the recovery had finally taken hold.
The major stimulus though has come from Government initiatives such as the Funding for Lending and Help to Buy schemes, which have pushed down interest rates and made mortgages more accessible.
The second phase of the Help to Buy scheme was brought forward three months and the mortgage lenders who are involved have reported a positive start with large numbers of applications.
Only time will tell whether these factors push house prices up in line with the predictions from Knight Frank. Although if figures from the Halifax and Nationwide, showing growth over the past 12 months of 6.90% and 5.80% and replicated over the next two years, Knight Frank’s predictions could well come true.