blank article banner
Residential

House price growth forecast is tripled

Q3 2013

A major property website has once again revised its house price growth prediction for this year, amid growing fears that the market is inflating towards a bubble.

A major property website has once again revised its house price growth prediction for this year, amid growing fears that the market is inflating towards a bubble.

Rightmove initially forecast that sellers’ asking prices would rise by 2% across 2013, although it has since tripled this estimation.

It now believes that prices are set to rise by around 6%, after previously raising its prediction to 4% a few months ago.

Prices are currently 4.5% higher than a year ago, despite a 1.5% month-on-month fall in September to an average of £245,495.

It is the second monthly fall in a row, following a 1.8% contraction in August. Nevertheless, prices have still soared by around £16,500 since the start of the year.

All but two regions in England and Wales witnessed an annual increase in September, with London unsurprisingly enjoying the biggest year-on-year growth of 8.2%.

Prices have shot up by 6.8% in the west Midlands, followed by 5.6% in the South East and 3.8% in Wales.

On the other hand, prices remained flat in the North and fell by as much as 1.3% in Yorkshire and Humberside.

Michael Fiddes, Strutt & Parker's head of residential said: “Although there is talk of a price bubble, it doesn’t feel like that across all areas of the UK. London and the SE has seen the biggest surge, but prices have fallen in other regions”.

But despite a fall in recent months, Rightmove claims that prices are beginning to turn around as the autumn season kicks into gear.

Market activity traditionally slows down around the summer holiday period and sellers price their properties keenly to tempt buyers into a deal.

The volume of sellers coming onto the market this month is the lowest since February, according to the website, although traffic is still up by a fifth compared to last year.

“The autumn market is set to heat up as the weather cools down following the summer lull in fresh property supply,” said Miles Shipside, director at Rightmove.

“While prices fell during the month overall, the last couple of weeks have seen the start of a turnaround, with more sellers choosing to come to market and pitching at higher prices as momentum rebuilds.”

Last week, the Royal Institution of Chartered Surveyors suggested that a 5% cap should be placed on annual house price growth to stop any future house price bubble and borrowers taking on too much debt for fear of missing out on a boom.