Real Estate Marketing & Beyond
UK real estate experts are predicting that house prices will increase by 6% annually for the next five years. According to the Royal Institution of Chartered the Surveyors some homeowners are afraid to put their property on the market for fear of not finding anything else, as there is a chronic shortage of homes for sale.
The article in this is money.co.uk says these factors will lead to an increase in values of around 35% by 2020. This news comes as figures for loans for house purchases in February show no seasonal dip. Data from the Council of Mortgage Lenders showed that mortgage loans increased by 32.6% annually, reaching 48,400 in February.
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There was a huge increase in the number of loans handed out to first time buyers in this month, as 22,200 home loans worth £3.1 billion were advanced, a 55% increase compared to the same time last year. However, the RIC S also suggests that many middle income families may be unable to purchase property in the future, as it will become increasingly difficult for them to get onto the housing ladder.
This is quite a concern as there are not enough houses for sale in areas where people would like to buy, and until this imbalance is corrected then prices are likely to continue rising. The RICS report expects real estate prices to rise everywhere during the next five years, with price increases of 9.3% in the capital, while price rises of just 2% are being predicted in the North. Experts are beginning to talk about a property bubble in London but feel this is not so much of a concern outside the capital, as real estate activity is not particularly strong compared to long term averages. The IMF has already called on the Bank of England to show vigilance over real estate prices.
The housing shortage is partially due to population growth, continued low interest rates, and a lack of house building. Back in the 80s people used to move home every eight years, but now they typically move once every 22 years. This is also partly due to increases in stamp duty rates which were fixed at 1% up to 1997, but which can now cost as much as 7% on multimillion pound homes. This has led to a trend of improving current homes through extending or carrying out loft conversions as opposed to moving. While the number of buyers registering with real estate agents has increased throughout the whole of the country, the number of homes being listed has not.
