House price stability predicted for 2013
The latest Halifax house price index shows prices in the three months from September to November were 0.7% lower than in the preceding three months but were almost identical to November 2011 levels.
The forecast for 2013 is set to remain challenging, claims the Halifax, with modest “pick-up” activity and the pace of growth remaining well below the UK’s long-term average rate.
Martin Ellis, housing economist at the lender, said: “Conditions in the housing market are likely to remain much as they are against this economic background. In 2013 prices are again likely to end the year at levels close to where they begin with the market continuing to lack any genuine direction.”
Ellis added: “The US fiscal cliff, the $600bn of fiscal tightening scheduled for January 2013, represents a key risk and uncertainty over whether Congress and the recently re-elected President can strike a deal remains high.
“The eurozone continues to make slow progress towards a comprehensive solution to its economic problems but considerable uncertainty remains over the outcome and therefore the prospects for the euro. As a result, the outlook for the UK economy and house prices remains more unclear than usual.”
Independent buying agent Gabby Adler said the Autumn market had been slower than expected with fewer new properties coming up for sale so transactions remained at low levels. She said: “Things have now wound down for Christmas so there will be little activity now until next year.”
Ellis said mortgage availability in 2013 should be improved by the Funding for Lending scheme which would help to ease credit constraints.
Peter Rollings, chief executive of estate agent Marsh & Parsons, agreed that the scheme should help to improve conditions.
He said: “Falling rates have begun to feed through into higher mortgage approvals recently, and while the level of lending is far from ideal, the slight pick-up unlocked enough demand to buoy house prices last month with many buyers hurrying to get into their new home before Christmas.
“However, in the absence of any stamp duty concessions for first-time buyers in the Autumn Statement how many steps forward the national housing market takes in the new year will be dictated by lenders’ ability to target buyers with the smallest deposits with cheaper loans, and by how much they can loosen their tight criteria.”
The Halifax outlook said the South’s house price performance would continue to outperform the North again next year.
Ellis said 2013 house prices are likely to be strongest in London and the South East as this part of the country performs best in economic terms. Prices in the capital are likely to continue to be supported by strong overseas interest buoyed by demand from wealthy individuals in the eurozone looking to protect their money from the uncertainty surrounding the future of the euro.
Jonathan Hopper, managing director of the property search consultants Garrington, said: “Regional disparities are getting more glaring than ever and the outlook for the country as a whole is still very mixed.”