The Chancellor’s Autumn Statement announced the government’s expectation that the period of austerity will continue until 2017/18. A recent report by The Legal and General Mortgage Club and the think tank CEBR, identified eight key factors that were preventing the UK housing market from returning to a state of normality until around 2017. The report, A New Normal in the Housing Market, as well as identifying certain factors, concluded that the British housing market was past the worst, but recovery would be slow.
The report’s definition of normality to the UK housing market would mean that the average house price would be around £254,000. This is 11.9% higher than the 2007 average house price, and 17% above the current house price average.
From 2017 onwards, the average housing price is expected to grow by 4.1% per year between 2017 and 2027. But compared to the growth of 11.4% per year between 1997 and 2007; 4.1% is a relatively modest increase.
At present however, house price growth between 2010 and 2019 is expected to suffer from the weakest growth since the 1950s. This is coupled by Halifax’s predictions that 2013 house prices will change from as little as 2% higher or lower than 2012 prices.
Despite this expected growth from 2017 onwards, it looks like first time buyers will continue to struggle to obtain a mortgage. The report expects lenders to maintain its strict lending criteria come 2017; and with average house prices expected to rise, those trying to get on the property ladder may need to raise even more deposit funds to get a mortgage application approved.
