Market Update

As we enter 2014 the media is full of the usual predictions for the housing market and, like house prices indices and reports throughout the year, these tend to cover a huge range of outlooks based on the way in which the information is collated and possibly the vested interests of the predictor.

There is however some consistency of views in that the property market has been improving in terms of transactional volumes during 2013 and house prices have also been rising.

Geographical factors impact on national headline numbers but certainly within our area, the sales market is stronger as we enter 2014 than it was when we entered 2013 a year ago.

House prices are moving upwards as demand outstrips supply and the launch of Help 2 Buy coupled with low interest rates is enabling many new buyers to enter the market and in turn this is stimulating a chain reaction across all price ranges.

RICS recently announced that house prices could rise by as much as 11% in 2014 although this will likely vary from region to region. My own view is that prices will rise in 2014 and certainly at a rate well above inflation. Inflation has been falling and the latest figures showed 2.1% in November 2013.

The general economy is, at last, showing quantifiable signs of improvement with more people working and unemployment falling. This is clearly good news and helps create confidence.

The outlook for interest rates looks to be steady in the short term and, almost certainly, throughout 2014 although the Bank of England have said they will review rates once the unemployment rate falls to 7%. It reduced to 7.4% in December.

With many excellent fixed rate schemes available, borrowers are able to plan and mitigate their position on any loans they are considering.

There is clearly a large amount of pent up demand and many people are looking to make moves that they have put off in recent years.

House building numbers, whilst increasing, are still far below the levels needed to meet demand and this is likely to continue to fuel price increases, particularly in the most popular locations.

The lettings market remains strong although rental values and demand have steadied in recent months as the sales market has improved. I expect the rental sector to remain strong in 2014 with good yields and capital growth benefiting landlords. A consistent market can be valuable to both landlords and tenants as it helps both with planning, the length of tenancies remains good and yields are strong due to a lack of void periods.

All in all I expect 2014 to be a good year for the housing market and for it to build on the improvements seen in 2013 in transactional volumes.

Peter Lawrence