Everyone seems interested in the recent property price hike and wonder whether there is enough momentum in the market to sustain this, or whether this was just a flash in the pan.
Recent Government statistics show that independent international economists predict strong UK house price rises over the next 5 years.
Latest analysis suggests a continued growth in property prices, albeit a marginal slowdown of this growth in the last couple of months and economists appear rather optimistic.
This month, the Treasury looked at forecasts for house price rises between now and the end of 2018, compiled by what it calls City and Non-City forecasts across a range of economic indicators.
City commentators such as Barclays Capital, Capital Economics, Citigroup, Commerzbank, Goldman Sachs, ING, Nomura and RBS Global forecast property price rises in 2014 of between 5.8% and 12%. In 2015 the predicted growth/increase will be 6% to 16.5%. In 2016 the increase will be 4.6% to 10.1%. In 2017 they anticipate 0.5% to 5.6%, and in 2018 the prediction is 1.7% to 5.0%.
The Non-City commentators include many household names in terms of management and economic consultancies like PWC. CEBR, the IMF, Beacon Economic Forecasting, Cambridge Econometrics, EIU, Experian, IHS Global Insight, Liverpool Macro Research, the NIESR, and Oxford Economics and their forecasts broadly mirror those of the City commentators.
It is true that a forecast is only a forecast and it does not mean that this is what will happen and as always with house price forecasts, there must be a number of warnings. It is also true that they may be less reliable, the further they look into the future, due to unforeseen events (and we have seen a lot of those in the last 6 years). Furthermore, they are averages and in this way they exclude obviously, regional variations. Additionally they do not take into account inflation in the general economy and how that may erode the anticipated house price growth.
Nonetheless, this data is part of the information assessed each month by members of the Bank of England Monetary Policy Committee when they decide whether to change UK base rate or not, therefore it has a lot of weight and should be taken seriously.
Growth at these rates is very healthy and it promises sustainability in the property market for the years to come, and the government should ensure that the property market remains this healthy for the years to come.
BY MARIO APOSTOLOU
LEADING PROPERTY EXPERT
FOLLOW on TWITTER @MARIOAPOSTOLOU