The report declares that although they expect price growth to slope when government schemes reach their end in 2016, the economy will generally be in a much stronger position, with surging employment and real incomes enabling house prices to continue on this trajectory.
The prediction was made on the back of this year’s results, were prices are expected to have risen in every UK region with the North West up 4.8%, East Midlands up 6.4% and London up 11.3%, being some of the best performing regions.
This year’s results mark a significant turnaround from recent years when prices dropped 26% between late 2007 and the end of 2012. This price growth is said to be encouraging transactions and contributing to labour mobility, while also arriving at a time when first-time buyers have greater access to the housing market, as a result of the recent Help to Buy Scheme.
This scheme is said to have already helped 15,410 buyers fund deposits for new-build homes and, if this take-up rate continues, then funding is set to run out by mid-2015, leading Knight Frank to predict that the government will provide additional funding to maintain the scheme through to its scheduled end date.
The Help to Buy scheme is also said to have had a positive effect on property developers, with planning applications submitted for private homes in schemes of 50 or more units having risen by 30% year-on-year over the summer, a measure of the scheme’s effect on new build developments.
As the second phase of the scheme (the mortgage guarantee) was only launched last month, Knight Frank say it is too early to assess its impact, but does state that 2,800 buyers have already submitted offers using the scheme and that if this trend were to continue, the number of mortgages which could be approved under the scheme could reach 1.5 million, taking sales volumes back to levels seen in 2005.
The report also details that fears of a housing bubble are premature, as price growth has only recently began to outpace inflation.
To read the report in full click here.