19 Jul UK house prices could rise 18% in next five years
UK house prices should rise by an average of 18.1 per cent by the end of 2017, say Savills.
Revising their forecasts six months ago, Savills believe that average prices will increase by 3.5 per cent this year – their earlier original forecast was 0.5 per cent. At these levels of growth, the UK average house price will beat its 2007 peak in 2015.
“A combination of low interest rates and stimulus measures means there is capacity for improved price growth over the next three years or so,” said Lucian Cook, director of Savills residential research. “But it comes at the price of later price growth in 2016/17 when interest rates are expected to start rising.
Meanwhile, the Council of Mortgage Lenders estimates that total gross mortgage lending in June increased to £15 billion, a rise of 2 per cent from £14.7 billion in May and 26 per cent higher than the total of £11.9 billion in June 2012. This is the highest monthly estimate for gross lending since October 2008.
Duncan Kreeger, director of secured peer-to-peer lender West One Loans, said: “Comparisons with October 2008 do nothing to hide the fact that mortgage lending in the UK still has a long way to go. Unwieldy high street banks might never recover the levels of business they saw before the collapse – the largest lenders are still losing market share to new forms of finance.”
Adrian Anderson, director of mortgage broker Anderson Harris, said: “Mortgages are getting cheaper and banks are issuing more of them, a trend lenders expect to continue in coming months. Increased consumer confidence and cheaper funding costs as a result of Funding for Lending are combining to boost the housing market. Lenders are clearly demonstrating an increased appetite to lend and are having to do so at higher loan-to-values if they want to compete.
“The number of homeowners in arrears or being repossessed was largely flat or fell slightly, which is good news but you would hope with interest rates at record lows that we would be seeing significant falls in the number in difficulty. The high cost of living and other issues, such as unemployment or relationship breakdown, are likely to be the main reasons why homeowners are struggling to pay their mortgage. Lenders need to continue to show forbearance and work hard with homeowners to keep them in their homes if at all possible.”