House prices will end 2014 between 4% and 8% higher than they start the year, but it is "too early to talk of a housing bubble", the UK's largest lender has said.
Further economic recovery and continued low interest rates should support the market, according to Halifax, but several factors – including continuing pressure on household finances – should limit the increase.
The lender has reported a 7% increase in prices in the first 11 months of 2013, which puts the average UK house price at £174,910 at the end of November. An 8% increase would push this up by more than £1,000 a month to £188,903, which is still some way from the £199,612 peak recorded in August 2007.
Halifax's chief economist, Martin Ellis, said: "Despite the recent gains, house prices remain 12% below their August 2007 peak, and transactions in 2013 are still around a third below the average for 2006 and 2007.
"House prices are also lower in relation to earnings, with the average price currently 4.8 times average annual earnings compared with a multiple of 5.8 in 2007. There is little sign of the excessive behaviour associated with a house price bubble at present."
Ellis said that another year of growth at the current rate would not be enough to create a bubble, pointing out that between 2001 and 2004 there were double digit increases each year, and that overall prices increased by 150% in the eight years leading up to 2007.
"The authorities, primarily in the form of the Bank of England's financial policy committee, are also on guard to implement measures to dampen the housing market should signs of overheating materialise."
The main story of 2013 has been the widening divide between activity in London and the rest of the country, with most house price indices showing headline rates of price inflation being driven by double digit increases in the capital.
Ellis said he expected the gulf to reduce in 2014, as all regions saw price gains and potential buyers become more stretched in London. The income multiples needed to buy in London are already at a record high, and this should constrain further rises, Ellis said.
Halifax's prediction is broadly in line with other commentators who have suggested that a growing appetite for properties, boosted by an improving economy and government schemes like Help to Buy, will drive up prices in 2014 unless a large number of homes come on to the market.
An increase in interest rates could also have an impact, but Halifax said it expected the base rate to remain at 0.5% until the end of 2014. At the end of 2012 the bank predicted that house prices would remain broadly flat this year, with movement expected to be between a 2% fall and a 2% rise.
Ellis said the stronger than anticipated market had been driven by a number of factors: "Low interest rates, and higher consumer confidence due to the increasing evidence that a sustainable economic recovery may now be underway, are helping to stimulate housing demand. "Schemes such as Funding for Lending and Help to Buy also appear to have boosted demand."
theguardian.com
Further economic recovery and continued low interest rates should support the market, according to Halifax, but several factors – including continuing pressure on household finances – should limit the increase.
The lender has reported a 7% increase in prices in the first 11 months of 2013, which puts the average UK house price at £174,910 at the end of November. An 8% increase would push this up by more than £1,000 a month to £188,903, which is still some way from the £199,612 peak recorded in August 2007.
Halifax's chief economist, Martin Ellis, said: "Despite the recent gains, house prices remain 12% below their August 2007 peak, and transactions in 2013 are still around a third below the average for 2006 and 2007.
"House prices are also lower in relation to earnings, with the average price currently 4.8 times average annual earnings compared with a multiple of 5.8 in 2007. There is little sign of the excessive behaviour associated with a house price bubble at present."
Ellis said that another year of growth at the current rate would not be enough to create a bubble, pointing out that between 2001 and 2004 there were double digit increases each year, and that overall prices increased by 150% in the eight years leading up to 2007.
"The authorities, primarily in the form of the Bank of England's financial policy committee, are also on guard to implement measures to dampen the housing market should signs of overheating materialise."
The main story of 2013 has been the widening divide between activity in London and the rest of the country, with most house price indices showing headline rates of price inflation being driven by double digit increases in the capital.
Ellis said he expected the gulf to reduce in 2014, as all regions saw price gains and potential buyers become more stretched in London. The income multiples needed to buy in London are already at a record high, and this should constrain further rises, Ellis said.
Halifax's prediction is broadly in line with other commentators who have suggested that a growing appetite for properties, boosted by an improving economy and government schemes like Help to Buy, will drive up prices in 2014 unless a large number of homes come on to the market.
An increase in interest rates could also have an impact, but Halifax said it expected the base rate to remain at 0.5% until the end of 2014. At the end of 2012 the bank predicted that house prices would remain broadly flat this year, with movement expected to be between a 2% fall and a 2% rise.
Ellis said the stronger than anticipated market had been driven by a number of factors: "Low interest rates, and higher consumer confidence due to the increasing evidence that a sustainable economic recovery may now be underway, are helping to stimulate housing demand. "Schemes such as Funding for Lending and Help to Buy also appear to have boosted demand."
theguardian.com
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