Buy to Let

Rapid rise in house prices predicted in 2013

Adam Williams
Written By:
Adam Williams

Research shows that house prices have risen in the last year with forecasts for the rest of the year being revised upwards.

Figures released by the Office for National Statistics showed that the average buyer paid 2.9% more for a house in May than they did at the same point last year. This rise was even higher for first-time buyers with the average property for new buyers rising by 4.1% during the last 12 months.

This has caused estate agency chain Savills to up its forecasts for 2013 from 0.5% to 3.5% with London growth predicted to be around 6% for the year. Across the UK, the firm now expects house prices to have grown 18.1% by the end of 2017.

“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.”

He added that government intervention in the market was fostering confidence among consumers and would push house prices higher.

“Help to Buy goes further than any of its predecessors in being aimed at all buyers, not just first-time buyers, but we believe its primary impact will be increased transaction levels and that higher than expected price growth is a secondary impact.

“Its launch into an improving market has triggered concerns that the government will provoke another bubble. But, in our view, these are overstated given the conditions which attach to the scheme.”