Residential property transactions will enjoy double-digit growth rate to break the one million mark in 2016, as the housing market returns to health.
And transactions will grow by 50% in total between now and 2018, pushing up house prices in England and Wales by 6% in 2014 and 24% over that time, according to Hamptons International’s 2014 Housing Market Forecast.
Despite the national fixation on property prices, transactions are the most accurate indicator of the strength of the housing market, said Hamptons research director Fionnuala Earley. "Transaction levels are a far superior indicator of housing market health. A liquid and active market is the key to avoiding volatility and will pave the way to a healthier market."
Improved confidence built on economic recovery, and government stimulus such as Help to Buy and Funding for Lending will all drive transactions and prices.
Prices in central London will grow fastest at 8% in 2014 and 32% over five years.
But the breakneck pace of growth will slow in prime central London to 3% in 2014, although extreme supply shortages were still lead to 20% growth over five years.
The Hamptons report, which predicts transactions and house prices for the next five years, is based on national economic and house price data and provides a national view.
While we have been operating in a half-market, with activity at just over half of 2008 levels, transactions are on the increase and will continue to grow.
The new build sector will also support transaction levels but with only about 10% of transactions coming from new build completions, returning sellers will be the most important driver.
Earley added: "It will take a long time before they return to levels we became accustomed to five years ago. Households are still stretched and as prices increase, affordability will bite too.
"London, the only part of the UK where prices are now above their pre-recession peak, will continue to outperform other regions. Central London, where transactions are highest but supply is an issue, will see the largest price growth.
"By contrast, prime central London will underperform England and Wales for the first time since 2005."
Comments