MortgagesJul 21 2014

Rightmove upgrades property market forecast

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Rightmove has revised its year-end forecast to 8 per cent, in spite of the price of property coming to market falling for the first time in 2014, down by 0.8 per cent this month.

The online property portal maintained that this was still “the year to move” in spite of a seasonal slowdown and a cautious tone from the Bank of England, with the forecast upgrade hitting the top end of its original forecast.

Its house price index suggested that while the Mortgage Market Review tightening will restrain buyers in high loan-to-income brackets, nearly half of home-movers who expect to buy over next 12 months are “equity-rich third-timers”.

Miles Shipside, Rightmove’s director and housing market analyst, said: “A price fall in July is not unexpected as prospective buyers turn their attention to the summer holidays, not to mention the added distraction of an engaging World Cup.

“Buyer confidence may also have taken a knock with suggestions that mortgages are becoming harder to get and repayments may get more costly sooner than originally anticipated should the rumours of an interest rate rise before the next election come true.“

The BoE has been trying to cool some of the existing and potential excesses of the housing market, with affordability, personal debt and default risk all high on the agenda. The MMR, additional high loan-to-income and stress-testing guidance, along with suggestions of earlier than expected interest rate rises, have had a dampening effect.

Mortgage approvals are still running at an average of over 60,000 a month, 23 per cent higher than during the same period in 2013, and 40 per cent above the monthly average between 2008 and 2012.

“Market conditions still compare favourably with this time last year, with growth in both the economy and employment, plus a comparative thaw in mortgage availability,” added Shipside.

Help to Buy has been successful in unlocking higher deposit middle-market, according to Rightmove. The firm’s research of more than 27,000 potential home buyers looking to purchase in the next 12 months showed that by far the largest group are those who would be buying for at least the third time.

“First-time buyer numbers have been boosted since March 2013 by the two Help to Buy schemes, so this is an interesting shift in activity to higher up the housing ladder. The biggest and most active group of those looking for a new place to live are those with access to larger deposits, third-timers who have built up equity on at least two previous moves,” commented Shipside.

Simon Bradbury of Thomas Morris Estate Agents in Cambridgeshire, Bedfordshire and Hertfordshire added: “Recently there has been an increase in houses coming on the market and a slight reduction in demand, due to factors like the MMR and the wave of buyers who took advantage of Help to Buy having come and gone.”