UK housing market may 'surge ahead'
Chartered surveyors have said that house prices are likely to
continue "surging ahead" into the new year. A survey by the Royal
Institution of Chartered Surveyors (RICS), found that more surveyors
expected prices to rise than at any time in the past 14 years.
A separate forecast by mortgage lenders predicted that borrowing
would keep increasing in 2014. But the Council of Mortgage Lenders (CML)
added an "unbridled" housing boom was "unlikely."
The last time such a clear majority of surveyors expected price rises
was in September 1999.
 "It's no secret that the housing market is on the way up and prices
are surging ahead in many parts of the country," said chief economist
for RICS, Simon Rubinsohn.
The CML is predicting that gross mortgage lending will rise from £170
billion in 2013, to £195 billion next year, reaching £206 billion in
2015.
In its forecast a year ago, the CML had predicted that mortgage
lending would fall next year. But the forecasts suggest that lending
will still fall a long way short of the boom years.
In 2007, gross lending amounted to £363 billion. In the years after
2015, the CML said it believes that housing market activity "may well
ease back of its own accord".
Analysts say this might happen if the Bank of England raises interest
rates, since mortgages would become more expensive.
The Office for Budget Responsibility (OBR), an independent watchdog,
has said it expects a rate rise to happen sometime in 2015, when it is
anticipated that UK unemployment will fall to 7%.
The Bank of England has said it would not consider raising interest
rates until the unemployment rate hits this key target.
The CML has said it believes most borrowers will handle any such
increase. "We think there are good grounds to be optimistic that the
vast majority of households will cope with a slow but certain transition
to more normal interest rates," said the CML's chief economist Bob
Pannell.
RICS said the decision to end the Bank of England's support for
mortgages under a scheme for banks called Funding for Lending (FLS)
would also have an impact in slowing the market down. But it believes
mortgages are likely to remain relatively cheap for a while to come.
"The improvement in wholesale and retail funding markets may mean the
impact on mortgages is relatively limited," said Rubinsohn. The OBR
expects house prices to rise by 5.2% in 2014, and 7.2% in 2015.
BBC
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