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House price growth forecast raised

Property website Rightmove has raised its forecast for annual house price growth in 2014, despite a fall in values this month for the first time this year.

House prices have fallen 0.8% so far this month, but the firm forecasts annual prices will lift 8% this year, boosted by Help to Buy for first-time buyers, more affluent third-time buyers in the market and faster selling times.

Rightmove estimates house prices will continue to rise despite measures introduced by the Bank of England last month to curb prices such as new caps on high loan-to-income value loans and stronger affordability “stress tests” for borrowers.

Earlier this week the Office for National Statistics said house prices in London had risen at a record annual rate of 20.1% while they were up 10.5% across the UK.

Rightmove said the Government’s Help to Buy scheme had not only encouraged first-time buyers, but had freed up the market for richer third-time buyers who could afford larger properties.

Rightmove director Miles Shipside said: “The unleashing of this more affluent group, plus good supporting acts from first-time and second-time buyers, will mean that the musical chairs of trading up and down will continue in the second half of the year having been kick-started by Help to Buy in the first half.”

The group also said that speeding up of housing completions, down 10 days year-on-year to 65 days had brought more sellers into the market.

The housing website also added that the London ripple effect, which pushes up the prices of properties around the capital, continued unabated because of the shortage of suitable housing stock.

The firm added it was seeing the beginnings of the same London ripple effect around large northern cities such as Manchester, Leeds, York and Liverpool.

Rightmove also added that July is historically a slow house sales month as buyers go on holiday, and this year were distracted by the World Cup.

The group said July had seen house price falls in six of the previous 10 years.

Mr Shipside said: “Market conditions still compare favourably with this time last year, with growth in both the economy and employment, plus a comparative thaw in mortgage availability.”

Rigthmove’s forecast of 8% house growth in 2014 is at the top of the 6% to 8% range the firm set last December.

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