2014 is due to see an increase in house prices, according to the RICS. It’s estimated that the average house price will increase by up to 8%, whilst the cost of renting a home could also rise by 2%. The RICS believes that this increase is due to a widening gap between supply and demand, as many estate agents find themselves very close to stagnation.
Increase in New Builds
As the economy improves into 2014, the increase in house prices will also be met with an increase in house sales. It’s estimated that the number of transactions taking place across the UK will rise from 1.05m to 1.2 million.
There’s also good news for the building trade, as the amount of new builds increases by a whopping 20% over the coming year. That works out at 155,000 new homes being built, compared to 125,000 in 2013, and only 100,000 in 2012.
Rental prices will rise modestly, with indicators pointing to the East and West Midlands experiencing the largest gains.
London is due to see the highest price increases, with the capital expected to see a rise of almost 11% in average house prices. But the RICS expects that better employment opportunities and a healthier economy will mean that the rest of the country experiences this recovery in 2014.
2014 could be a good year for the housing market. Following on from a strong finish in 2013, there will be a gradual improvement for many of us within the industry.
Improvements Due to Government Schemes
The RICS claims that the improvement to the macro economy has meant an improvement in the housing market, and government schemes like Funding for Lending and Help to Buy have also meant higher housing transactions.
However, there are a number of things to consider, which do not paint such a rosy picture.
Although the number of house sales is due to increase, the figure of 1.2 million being touted is below the amount of total sales for 2006, which were much higher at 1.67 million. This means there has been very little improvement over almost a decade, and it can only be hoped that the signs of recovery continue to flourish and don’t fall back this year.
Supply Failing to Meet Demand
The RICS is also concerned that the amount of houses available is falling way short of the demand for homes. It is unlikely that we will see an increase in housing stock reaching the 200,000 mark, with the restraints being placed on developers by local government. Whilst the increase in new builds is an encouraging trend, it falls way short of the demand created by the rapid population growth of the UK.
And for those living in the North East and Northern Ireland, the increase in house prices will be much less than in the rest of the country, with prices increasing by just 4 and 5% respectively.
Nevertheless, the RICS Housing Market Update does foresee a good year ahead in 2014. The picture at the start of 2014 is looking much different to the downbeat one that presented itself at the start of 2013.