UK house price predictions for 2014

Packing boxes The memory of moving house for many is being surrounded by boxes

If you move home, you are going to need boxes - and plenty of them.

So the mood of a packaging supplier should give some impression of the vitality of the UK housing market.

Patrick Sheehy, sales director at PHS Teacrate, says that 2013 was a year of recovery for the packaging business and the housing market.

The biggest dip, he says, was in 2011 - but things have picked up since, although they are not back to the boom years of 2006 and 2007.

Movers, he explains, are searching for value for money. Cardboard boxes and brown tape are still the products of choice for most people packing up to move house, but many are renting crates. This gives them certainty regarding the cost, making it easier to budget during a time of considerable expense.

Mr Sheehy says there is more activity than usual over winter. Staff have been known to take time off in December, but they have stayed to supply plenty of movers this time.

Market stimulant

So, is this acceleration in activity likely to continue throughout 2014, and what will this mean for house prices?

The interactive content on this page requires JavaScript

UK house prices

Year on year % change

Reset

Ray Boulger, of mortgage broker John Charcol, says that he expects an 8% rise in house prices in 2014, based on the Halifax and Nationwide indexes.

This would match the kind of annual increases seen at the end of 2013, which he admits would have been a surprise for anyone studying the market at the start of 2013.

He says that two schemes to stimulate the housing market "moved the goalposts" during the year.

They were the Funding for Lending scheme, which offers cheap funds to lenders under the proviso that this is then lent on to mortgage borrowers and small businesses, and the Help to Buy scheme.

BBC housing calculator

Renting example
  • Lets you see where you can afford to live - and if it would it be cheaper to rent or buy
  • Enter how many bedrooms, which end of the market and how much you want to pay each month
  • As you move the payment slider, parts of the UK light up to show you where you can afford
  • Based on pricing and rental data from residential property analysts Hometrack

The former is being restricted to just small business lending, but the latter has been extended, giving borrowers access to mortgages if they are able to afford the repayments, but have little to put down as a deposit.

Mr Boulger says that there is no great shortage of funding. He predicts that this will be borrowed by people buying homes across the UK - not just in London, which drove the increase in average prices in 2013.

"There is a ripple effect, so next year, I do not see London as having the biggest regional rise in house prices," he says.

That is not a view shared by housing market commentator Henry Pryor. He predicts that house prices will go up by 5% nationally in 2014, but rise by 8% within the M25 motorway.

There is, he suggests, little appetite among politicians to put the brakes on the housing market.

"Next year, the coalition [government's] ambition is that the housing market goes from strength to strength ahead of the next election," he says.

The result is that homeowners will see the kind of prices that neighbouring homes are being sold for, tempting them to put their property up for sale.

Price rises in 2013 were the result, in part, of a lack of supply, so this could even out a little in 2014. Yet, Mr Pryor still predicts a "buoyant" London market.

Bank's toolkit

Ed Stansfield, chief property economist at Capital Economics, says he too expects London to be "at the front of the pack" when it comes to house price rises. Overseas investment in London property means this market differs from the rest of the country.

House price predictions 2014

  • Ray Boulger: 8% rise
  • Henry Pryor: 5% rise
  • Ed Stansfield: 4% to 5% rise
  • Miles Shipside: 6% to 8% rise
  • Peter Bolton King (Rics): 8% rise
  • Martin Ellis: 4% to 8% rise

Despite the distinction, he predicts price rises of 4% to 5% on average across the UK next year.

He points out that rising house prices will not be greeted with "universal glee", and the Bank of England has tools at its disposal to cool the market.

However, he says that these tools are untested. It is not clear how the market would cope with an increase in interest rates, the traditional way to control runaway prices.

The Royal Institution of Chartered Surveyors, with members including estate agents, says that it is dangerous to see the UK market as a single entity.

It is predicting an 8% rise in house prices nationally in 2014, but this ranges from an 11% rise in London to a 5% increase in the North East of England. It expects the cost of renting a home to go up by 2%.

Miles Shipside, director of property website Rightmove, says he expects prices to rise by 6% to 8% in 2014, depending on the decisions made by potential sellers.

"A good and plentiful choice of property for sale would limit sellers from getting over-ambitious with their asking prices and result in a national average increase closer to 6%," he says.

Martin Ellis, of the Halifax, makes a similar prediction of a 4% to 8% rise, owing to a continued economic recovery and low interest rates.

All these predictions of price rises should ring a warning bell, with many local housing markets already overheated, according to Prof James Mitchell.

The economics professor from Warwick University says that most regions of the UK are already in a house price bubble.

"The results raise the risk, although not the certainty, that house prices will fall, although predicting the timing and manner of any fall is even harder than identifying the presence of a bubble," he says.

"But a bubble it appears to be and we should all - householders, business people and policymakers alike - be alert to this risk."

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    HOUSE PRICES 10:32:
    A chart showing house price growth over 10 years

    As this chart from the ONS shows. House price growth across the UK in percentage terms is nearing levels seen in the run up to the financial crisis. In six English regions - the South East, East Midlands, the East, the West Midlands, the South West and London - house price growth has now gone beyond pre-financial crisis levels suggesting the recovery in the property market has widened significantly this year.

     
  2.  
    MARKET UPDATE 10:23:

    The FTSE 100 has added to early losses, now down 0.5%.

     
  3.  
    HOUSE PRICES 10:10:
    Kentish town

    If London were removed the national statistics, average house prices would have risen by a more modest 7.9% in the year to July, the ONS says. In London house prices are now a staggering 39.7% higher than their previous January 2008 peak. The average price paid for a property in London in July was £514,000, the figures show.

     
  4.  
    INFLATION REACTION Via Email Ben Brettell, Senior Economist, Hargreaves Lansdown

    emails: "With inflation at a five-year low, it is difficult to see why the Bank of England should even consider raising interest rates at present. We are faced with uncertainty around the Scottish referendum, and there are signs the economy is slowing somewhat, with UK manufacturing activity growing at its slowest rate in 14 months in August."

     
  5.  
    HOUSE PRICES 09:45:
    A view of houses in north London

    The average UK house price rose 11.7% in the year to July to £272,000 official figures show, up from 10.2% in June. On a seasonally adjusted basis the ONS says house prices rose by 1.6% month-on-month. As usual house price growth has been driven by the capital where the average property increased in value by 19.1% in the year to July.

     
  6.  
    INFLATION 09:35:
    Chart showing falling inflation

    Food prices actually fell 1.1% on the year, according to the Office for National Statistics. ONS statistician Richard Campbell told BBC News that a price war among supermarkets and a good growing season are factors behind lower food prices. Falling petrol and diesel costs were the next biggest contributor to lower inflation.

     
  7.  
    INFLATION Breaking News

    Consumer Price Inflation for August fell to 1.5% from 1.6% a month earlier, official figures show. The biggest contributor to the slowdown in the rate came from food and drink prices, the Office for National Statistics says.

     
  8.  
    INFLATION 09:19:

    We await UK August inflation numbers due at 09:30. In July Consumer Price Index (CPI) inflation fell to 1.6% from 1.9% a month earlier. However average wage growth was just 0.6% in the three months to June.

     
  9.  
    PHONES 4U COLLAPSE 09:11: Radio 5 live
    Phones 4U shop

    Phones 4U founder John Caudwell is back this time on Radio 5 live. He says that Phones 4U would never have pushed the network operators so hard in negotiations that they would have been forced to walk away. It would have made no sense to have alienated their only suppliers, he argues. But he concedes that he doesn't know the facts of the matter.

     
  10.  
    HIGH STREET VACANCIES 09:00:
    Charity shops

    Overall high street vacancy rates have fallen in the first-half of the year, according to The Local Data Company (LDC). On Radio 5 live Matthew Hopkinson of LDC says there are lots more charity shops, pound shops and also independent retailers. He also says that vacancy rates in the North West are double that of London (16.9% versus 7.8%).

     
  11.  
    ASOS SHARES SLUMP 08:46:

    ASOS shares are almost 13% lower so far this morning. The online fashion retailer warned that profits would not grow in the current financial year. Sales rose 15% in the three months to the end of August, but that was a sharp slowdown from the previous quarter when sales accelerated 25%. ASOS shares are down more than 60% over the last six months.

     
  12.  
    PHONES 4U COLLAPSE 08:30: BBC Radio 4

    The former chief executive of the Office for Fair Trading John Fingleton tells Today it is "highly unlikely that Vodafone and EE colluded to reduce high-street competition by cancelling their contracts with Phones 4 U." Mr Fingleton, who was head of the OFT from 2005 until 2012, says there is "no evidence" of collusion and rejects any call for an investigation into the matter.

     
  13.  
    PHONES 4U COLLAPSE 08:23: BBC Radio 4

    As well as condemning the network firms, Mr Caudwell also dishes out criticism for the BC Partners, the private equity firm that owned Phones 4U. He says it took £200m out of the business. "I don't like the fact they did it because they left the business much more vulnerable but it was manageable," he tells Today.

     
  14.  
    HEADLINES
    • Inflation rate falls to 1.5% in August
    • Phones 4U 'assassinated' by networks claims Caudwell
    • Calpers withdraws $4bn from hedge funds
     
  15.  
    PHONES 4U COLLAPSE 08:09: BBC Radio 4

    The "ruthless actions" of mobile phone networks were behind the demise of Phones 4U says founder John Caudwell , who sold the business in 2006. It was an "unprecedented assassination" of the company by the networks which had partnered the firm for 20 years he said on the Today programme. The idea the Phones 4U managers "dug their heels in" during negotiations is "preposterous", he says adding "I simply don't believe Vodafone".

     
  16.  
    THOMAS COOK 07:56:
    The logo of travel agency Thomas Coo

    UK holiday operator Thomas Cook says it expects full-year earnings to the end of September will be in the range of £315m to £335m putting it broadly in line with analyst expectations. It added weaker prices, which it first warned about in May, continued but it had offset that impact by speeding up its cost-cutting programme.

     
  17.  
    CALPERS DUMPS HEDGE FUNDS 07:41:

    US pension giant Calpers is withdrawing all of its investments in hedge funds, blaming their expense and complexity. That's a cool $4bn (£2.4bn) leaving 30 hedge funds. Calpers, which stands for the California Public Employee's Retirement System, is the biggest public pension fund in the US.

     
  18.  
    Via Twitter Nick Bubb, retail analyst

    tweets: "Ouch....Q4 sales at ASOS weren't quite as bad as feared (+15%), but ASOS warn that there will be no profit recovery in y/e Aug 2015"

     
  19.  
    MAURICE LEVY 07:30:
    Mauricy Levy

    Maurice Levy, one of the most influential figures in advertising and in France, is to stand down as chairman of advertising giant Publicis in 2016. He is credited with turning Publicis into one of the world's biggest advertising agencies.

     
  20.  
    ASOS TRADING 07:18:
    ASOS

    Asos says that a fire at its Barnsley distribution centre in June resulted in lost sales of between £25m and £30m. But the online fashion retailer expects annual profit to still be in line with market expectations. Total first quarter sales rose 15%.

     
  21.  
    SCOTTISH INDEPENDENCE 07:05: BBC Radio 4
    pound coins

    What will happen to the currency on Friday it Scotland votes in favour of independence? George Godber of the fund manager Miton tells the Today programme that he can see "a very significant fall" in the value of the pound, maybe as much as 10% over about a week. That's because the UK's status as the fastest growing Western economy and a safe haven will be put in jeopardy, he says.

     
  22.  
    RUSSIA GAS 06:49: BBC Radio 4

    Europe could cope if Russia were to interrupt gas supplies in retaliation to European sanctions, says Malcolm Bracken of stockbrokers Redmayne Bentley. Norway can increase oil and gas production and gas reserves are in a pretty healthy shape, he says. Vladimir Putin needs money from the West more than he's letting on so we shouldn't be too worried about the effect of sanctions, says Mr Bracken on Today.

     
  23.  
    BUSINESS RATES 06:43:

    More than 100 of the UK's biggest companies, including Tesco and Marks & Spencer, have called for an overhaul of business rates. In an open letter to the Daily Telegraph they say business rates "are no longer fit for purpose for the 21st century". The tax brings in £25bn for the Treasury annually.

     
  24.  
    OIL PRICES 06:35: BBC Radio 4

    Brent Crude fell below $97 a barrel on Monday for the first time in two and a half years. Malcolm Bracken of stockbrokers Redmayne Bentley explained the fall on the Today programme. "There's been a slowdown in China, cars are becoming more efficient, the war premium is falling, sanctions haven't really had an effect on oil production in Russia and money is tightening," he says.

     
  25.  
    ALIBABA SHARE SALE 06:20: Radio 5 live
    Alibaba head office, Hangzhou

    Alibaba has raised the price range of shares in its US stock market debut and could now raise $25bn (£15.4bn). The funds will allow the Chinese internet company "to make its mark" in the US market place says BBC Business presenter Rico Hizon on Wake Up to Money. Company executives are on an international road show to market the shares. Today there are in Singapore, tomorrow London.

     
  26.  
    SCOTTISH INDEPENDENCE 06:12: Radio 5 live
    Scottish flag

    The leaders of the three main parties at Westminster have signed a pledge to devolve more powers to Scotland, if Scots reject independence. On Wake Up to Money Colletta Smith, the Economics Correspondent for BBC Scotland says it amounts to an "agreement to make some kind of agreement". Details will have to be worked out after the vote, she says.

     
  27.  
    PHONES 4U COLLAPSE 06:02: Radio 5 live
    Phones 4U

    "I'm not surprised it fell over," says fund manager, George Godber in reference to the failure of Phones 4U over the weekend. On Wake Up to Money Mr Godber says the company did "not have any room for financial manouevre" because its private equity owners had recently loaded it with £250m in debt. Phones 4U founder John Caudwell will be on Radio 5 at around 08:45.

     
  28.  
    06:00: Matthew West Business Reporter

    Morning folks as always you can get in touch with us here at bizlivepage@bbc.co.uk and on twitter @bbcbusiness.

     
  29.  
    05:59: Ben Morris Business Reporter

    Good morning. It's shaping up to be a busy morning with inflation figures due at 09:30 and we'll see what John Caudwell has to say about the demise of the company he founded, Phones 4U. Stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.