2014: A landmark year for property as prices soared - but tinkering with the market means next year could be different
12-29-2014
- Halifax, Nationwide, ONS and Rightmove all show property price gains
- Major changes to property market this year, including stamp duty and MMR
- This is Money rounds-up expert predictions for next year
By Lee Boyce for Thisismoney.co.uk
2014 looks increasingly like a milestone year for the UK property market.
Many regions have seen double-digit percentage price increases and property values surpassing their pre-crisis peak.
The key house indexes vary in where they say property prices now sit, but all have one common trait – values are higher than the start of 2014, continuing a winning run for prices since
However, the most recent signs are that price rises are easing.
Bumper year: House prices have soared according to four indices published by Halifax, Nationwide, ONS and Rightmove - the figures in the arrow show how much each says house prices have risen by
It has also been a landmark year for the rules governing the property market. The way people borrow to buy a house, the rules for lenders giving them a mortgage and the tax buyers pay have all been changed this year.
This is Money rounds up what has been an eventful year for property and reveals the direction experts believe prices will head in 2015.
House prices have seen strong growth in the last year, especially in the months leading up to the summer.
Most reports won't show how well prices performed in December until after Christmas, so the latest averages are up to November.
The Halifax house price index, which is based on loan approvals at the lender, showed property values sat at £175,736 in January. By last month, this figure hit £186,941 – the highest level recorded throughout the year.
It means, according to Britain's biggest mortgage provider, the average home has added £11,205 in value.
The Nationwide house price index, similarly based on loan approvals, shows slightly bigger gains.
In January, the building society had the average price at £176,491. Last month, this had grown to £189,388 - £12,897 higher. You can see the movement below:
Only way is up: Both Halifax and Nationwide have reported solid growth in the last two years - with the lead up to summer seeing the biggest gains
Indices from the Office for National Statistics and Rightmove show even bigger gains.
The ONS data takes in actual sale prices for all properties, not just those bought with a mortgage, while Rightmove only asking records prices listed online.
In January, the ONS has average house values at £252,000. By October – the index lags a month behind others – this had hit £271,000, some £19,000 of added value in just 10 months.
Meanwhile, Rightmove has asking prices at £243,861 at the start of the year, compared to £267,127 in November. You can see how these two indices have fared below:
Slight slowdown: According to the ONS and Rightmove figures, the first-half of the year saw strong growth, but this has tailed off slightly
But, annual growth has slowed recently
Although house prices have risen in the last year according to the data above, annual growth has started to slow.
For instance, the Nationwide report shows annual growth in November had fallen to 8.5 per cent. At its peak in June, this was 11.8 per cent - with marked falls in the months in between.
It's a similar story with the Halifax index. Annual growth was riding at 10.2 per cent in July and has slipped back every month since, to reach 8.2 per cent in November. The reasons for the slowdown are largely down to the below...
What moved the property market in 2014?
Property has been a hot topic this year and it will continue to be a political pawn in the lead up to the general election in May.
This year has seen a raft of rock-bottom mortgage deals, with borrowers continuing to benefit from Bank of England base rate glued at 0.5 per cent.
In the summer, talk was that this could rise within monthse, but this soon fell silent. Predictions for the earliest rate rise is now for the end of next year.Read our what next for interest rates round-up.
In April, obtaining a mortgage became harder after the Mortgage Market Review changes were enforced.
MMR means lenders now have to apply 'stress tests' to make sure someone can still afford their mortgage if interest rates went up to 7 per cent.
Then in October, as booming house prices hit their peak, the Bank of England stepped in to prevent overheating by recommending lenders issue no more than 15 per cent of their new mortgages at 4.5 times or more of an applicant's salary.
Then in December Chancellor George Osborne overhauled stamp duty in his Autumn Statement.
It means anyone paying under £937,000 pays less in tax than previously. Use our updated stamp duty calculator to see what difference the changes make.
Overall, lending has been on the increase, with Bank of England statistics showing that 1,082,390 people have either obtained a mortgage for house purchase, remortgage or other uses this year to October, compared to 1,045,916 to October last year – although, the numbers fell suddenly in the latest monthly BofE report issued at the start of December.
How many homes did we build?
The number of new house builds in England grew in the 12 months to September, latest figures from the Department for Communities and Local Government show.
Annual housing starts totalled 139,500 in the 12 months, up 17 per cent compared with the year before.
Annual housing completions totalled 117,070 in the same period, an increase of eight per cent compared with the previous 12 months.
But this is still far below the level most experts say is needed. The general figure cited is that we need about 230,000 new homes a year.
Bigger movement: The number of house starts appears to be on the increase, according to the DCLG
A shift to renting?
In May, a report claimed the majority of families will rent, rather than own, their home within a generation. At its peak in 2003, 71 per cent of households in England were owner occupied. Today the figure is just 65.2 per cent.
The report, based on research by a former Bank of England economist and published by the Intermediary Mortgage Lenders Association, said the trend will continue across the UK. By 2032, it predicts less than half – 49.2 per cent – of households in the UK will be homeowners.
Where will house prices go in 2015?
The Royal Institution of Chartered Surveyors believes house prices will rise by three per cent next year, with the North West, South East, West Midlands and Yorkshire and Humber seeing growth of five per cent. It predicts London on the other hand to see a year of zero growth.
Halifax expects property values to increase by three to five per cent during the course of 2015.
Richard Donnell, research director of Hometrack, expects smaller gains. He said: 'Overall we expect modest UK house price growth of two per cent in 2015, which is more in line with earnings growth.'
Savills prediction: The estate agent believes there will be no growth in London, while Scotland will see the biggest gains
Howard Archer, economist at IHS Global Insight, said: 'With housing market activity clearly off its early-2014 highs, we suspect house prices will generally rise at a more sedate rate over the coming months.
'Specifically, we expect house prices to rise by around five per cent in 2015 after a likely modest overall increase in the fourth quarter of 2014.'
Upmarket estate agents Savills expects property prices to rise two per cent across the UK next year, with the strongest growth seen in Scotland – and it also believes London will be flat, with prime property in the capital actually falling by 0.5 per cent.
The Office for Budget Responsibility expects house values to rise 7.4 per cent next year. Let us know your predictions in the comments section below the article.
2014: A landmark year for property as prices soared - but tinkering with the market means next year could be different
- Halifax, Nationwide, ONS and Rightmove all show property price gains
- Major changes to property market this year, including stamp duty and MMR
- This is Money rounds-up expert predictions for next year
2014 looks increasingly like a milestone year for the UK property market.
Many regions have seen double-digit percentage price increases and property values surpassing their pre-crisis peak.
The key house indexes vary in where they say property prices now sit, but all have one common trait – values are higher than the start of 2014, continuing a winning run for prices since
However, the most recent signs are that price rises are easing.
Bumper year: House prices have soared according to four indices published by Halifax, Nationwide, ONS and Rightmove - the figures in the arrow show how much each says house prices have risen by
It has also been a landmark year for the rules governing the property market. The way people borrow to buy a house, the rules for lenders giving them a mortgage and the tax buyers pay have all been changed this year.
This is Money rounds up what has been an eventful year for property and reveals the direction experts believe prices will head in 2015.
What has happened to house prices?
House prices have seen strong growth in the last year, especially in the months leading up to the summer.
Most reports won't show how well prices performed in December until after Christmas, so the latest averages are up to November.
The Halifax house price index, which is based on loan approvals at the lender, showed property values sat at £175,736 in January. By last month, this figure hit £186,941 – the highest level recorded throughout the year.
It means, according to Britain's biggest mortgage provider, the average home has added £11,205 in value.
The Nationwide house price index, similarly based on loan approvals, shows slightly bigger gains.
In January, the building society had the average price at £176,491. Last month, this had grown to £189,388 - £12,897 higher. You can see the movement below:
Only way is up: Both Halifax and Nationwide have reported solid growth in the last two years - with the lead up to summer seeing the biggest gains
Indices from the Office for National Statistics and Rightmove show even bigger gains.
The ONS data takes in actual sale prices for all properties, not just those bought with a mortgage, while Rightmove only asking records prices listed online.
In January, the ONS has average house values at £252,000. By October – the index lags a month behind others – this had hit £271,000, some £19,000 of added value in just 10 months.
Meanwhile, Rightmove has asking prices at £243,861 at the start of the year, compared to £267,127 in November. You can see how these two indices have fared below:
Slight slowdown: According to the ONS and Rightmove figures, the first-half of the year saw strong growth, but this has tailed off slightly
But, annual growth has slowed recently
Although house prices have risen in the last year according to the data above, annual growth has started to slow.
For instance, the Nationwide report shows annual growth in November had fallen to 8.5 per cent. At its peak in June, this was 11.8 per cent - with marked falls in the months in between.
It's a similar story with the Halifax index. Annual growth was riding at 10.2 per cent in July and has slipped back every month since, to reach 8.2 per cent in November. The reasons for the slowdown are largely down to the below...
What moved the property market in 2014?
Property has been a hot topic this year and it will continue to be a political pawn in the lead up to the general election in May.
This year has seen a raft of rock-bottom mortgage deals, with borrowers continuing to benefit from Bank of England base rate glued at 0.5 per cent.
In the summer, talk was that this could rise within monthse, but this soon fell silent. Predictions for the earliest rate rise is now for the end of next year.Read our what next for interest rates round-up.
In April, obtaining a mortgage became harder after the Mortgage Market Review changes were enforced.
MMR means lenders now have to apply 'stress tests' to make sure someone can still afford their mortgage if interest rates went up to 7 per cent.
Then in October, as booming house prices hit their peak, the Bank of England stepped in to prevent overheating by recommending lenders issue no more than 15 per cent of their new mortgages at 4.5 times or more of an applicant's salary.
Then in December Chancellor George Osborne overhauled stamp duty in his Autumn Statement.
It means anyone paying under £937,000 pays less in tax than previously. Use our updated stamp duty calculator to see what difference the changes make.
Overall, lending has been on the increase, with Bank of England statistics showing that 1,082,390 people have either obtained a mortgage for house purchase, remortgage or other uses this year to October, compared to 1,045,916 to October last year – although, the numbers fell suddenly in the latest monthly BofE report issued at the start of December.
How many homes did we build?
The number of new house builds in England grew in the 12 months to September, latest figures from the Department for Communities and Local Government show.
Annual housing starts totalled 139,500 in the 12 months, up 17 per cent compared with the year before.
Annual housing completions totalled 117,070 in the same period, an increase of eight per cent compared with the previous 12 months.
But this is still far below the level most experts say is needed. The general figure cited is that we need about 230,000 new homes a year.
Bigger movement: The number of house starts appears to be on the increase, according to the DCLG
A shift to renting?
In May, a report claimed the majority of families will rent, rather than own, their home within a generation. At its peak in 2003, 71 per cent of households in England were owner occupied. Today the figure is just 65.2 per cent.
The report, based on research by a former Bank of England economist and published by the Intermediary Mortgage Lenders Association, said the trend will continue across the UK. By 2032, it predicts less than half – 49.2 per cent – of households in the UK will be homeowners.
Where will house prices go in 2015?
The Royal Institution of Chartered Surveyors believes house prices will rise by three per cent next year, with the North West, South East, West Midlands and Yorkshire and Humber seeing growth of five per cent. It predicts London on the other hand to see a year of zero growth.
Halifax expects property values to increase by three to five per cent during the course of 2015.
Richard Donnell, research director of Hometrack, expects smaller gains. He said: 'Overall we expect modest UK house price growth of two per cent in 2015, which is more in line with earnings growth.'
Savills prediction: The estate agent believes there will be no growth in London, while Scotland will see the biggest gains
Howard Archer, economist at IHS Global Insight, said: 'With housing market activity clearly off its early-2014 highs, we suspect house prices will generally rise at a more sedate rate over the coming months.
'Specifically, we expect house prices to rise by around five per cent in 2015 after a likely modest overall increase in the fourth quarter of 2014.'
Upmarket estate agents Savills expects property prices to rise two per cent across the UK next year, with the strongest growth seen in Scotland – and it also believes London will be flat, with prime property in the capital actually falling by 0.5 per cent.
The Office for Budget Responsibility expects house values to rise 7.4 per cent next year. Let us know your predictions in the comments section below the article.
Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2884842/House-prices-boomed-2014-according-different-indices-happen-2015.html#ixzz3NCQkSETV
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