Is another property boom on the cards?

Many property analysts had high hopes for 2013 in terms of the property market with many predicting a steady recovery. So far what has happened is a rather fast recovery which on the surface seems like a good thing but could we be heading for another property boom?

Rightmove started the year with a prediction of a two per cent increase in property prices. Then in July they changed their prediction to a four per cent increase. Now just two months after their latest change they have tripled their forecast from the original two per cent. The property website advertise over 800,000 properties around the country and they believe that by the end of the year property prices in the UK will have increased by six per cent compared with last year.

Vince Cable who is the Business Secretary has warned that the fast paced increase in property prices could be a potential risk to the economy finally recovering. However the Government are convinced that the property market is a long way from collapsing again and they will be continuing their Help to Buy scheme which makes it easier for first time buyers to enter the market. Nick Clegg has rebutted the argument for a boom by stating that the Government and the Bank of England have the resources to stop this from happening.

Rightmove have increased their forecast following the Royal Institution of Chartered Surveyors, who are the trade body for estate agents and surveyors, urging for the Bank of England to introduce a limit to house price growth per year to five per cent. They believe that this will stop those buying a property taking on far too much debt just in case property prices soar massively and create a price boom.

The Financial Policy Committee which is part of the Bank of England have a meeting scheduled to take place tomorrow to discuss the possibilities of another housing bubble and what should be done to prevent it.

According to Rightmove, compared with this time last year the prices being asked from property sellers in London has increased by 8.2 per cent. In the west midlands property asking prices have increased by 6.8 per cent, in the south east by 5.6 per cent and in Wales prices have increased by 3.8 per cent each year.
There were two regions in the UK that didn’t actually see a price increase during September and these were the North and Yorkshire and Humberside where they actually saw a fall of 1.3 per cent. However in East Anglia there was an increase but it was the lowest in the country at 0.8 per cent.

Overall the average asking prices actually fell by 1.5 per cent during September and now the average property price is £245,495 which is after the “summer holiday slowdown” during August. Despite this decrease in average price the prices are still higher than this time last year by 4.5 per cent which totals to be £16,000.

Miles Shipside who is the director of Rightmove has said that some of the buyers who have been saving for a decent sized deposit would probably have tried to purchase a home before the Help to Buy scheme was launched. “As a result, we forecast the national average increase in new seller pricing for the whole of 2013 to be in the region of six per cent, partly driven by the strength of southern markets but increasingly contributed to by the more buoyant areas of the north.”
In a separate report that was created by the Building Societies Association has said that there are around 60 per cent of people that are certain that prices will increase before the end of 2013 which is the highest amount of people since they started collecting this data five years ago.

Overall it is important not to rush into a decision solely based on what may or may not be happening with the market. Don’t feel pressured to purchase a property now if you weren’t really thinking about it or were considering it for the near future. If another boom does occur then the same stagnant market will appear that was seen last year along with growing amount of people looking to rent a property.

If you are looking to purchase a property with the intention of renting it out ensure you have done your research and you have insured yourself against all aspects possible just in case something was to go wrong. Shop around for your landlord insurance policy to be certain you are getting the right price for you.

Leave a Reply