17 Jun

Confidence in the property market continues to grow

Confidence in the property market continues to grow

New research shows that confidence in the UK property market has more than doubled over the past year.

A study from Clydesdale Bank and Yorkshire Bank reports that 55 per cent of owners are predicting their homes will increase in value over the next 12 months, compared to 25 per cent at the same point in 2013.

The greatest confidence boost was seen in the East of England and Yorkshire and is suggests that the real estate market is enjoying a boom period that is not just limited to the capital.

Recent figures from the HM Treasury show that the number of housing transactions is at its highest level since 2008 and this is helping to drive the UK economy as a whole.

Confidence about house value increases stands at 80 per cent in London and 70 per cent in the south east.

The East of England was the least confident but most home owners are still predicting a rise, while the Midlands and South West all saw growing confidence but below the national average.

"While some differences remain around the country, it is encouraging to see confidence returning to the property market so widely and so clearly. Without exception, there has been a strong rebound in confidence in the housing market in the last year across the regions,’ said Andrew Pearce, retail director for Clydesdale and Yorkshire Banks.

He added that the confidence in the market is likely to generate demand for mortgage products and the number of transactions is expected to remain high.

"Recovery is still in its early stages and there must be care to balance the demand for mortgages so as not to see a repeat of past issues, but the wider economic measures are also pointing in the right direction for a sustained and sustainable period of growth," said the director.

However, a recent keynote speech from the governor of the Bank of England could suggest that the base rate of interest could be set to rise sooner than expected.

Mark Carney, speaking in London at the annual Mansion House dinner attended by City and business executives, signalled that people should be prepared for a rise before the end of the year.

It had been largely suggested by economists that the central bank would opt to increase rates in the first half of 2015 but recent performance may change such initial predictions.

"We expect that eventual increases in Bank rate will be gradual and limited," stressed the governor.

There are expected to be a number of factors influencing any possible rate changes, including the pound recent strengthening to a near five-year high against the dollar.

If the Bank of England do opt to raise the base rate of interest, it will be the first change since July 2007 when the Monetary Policy Committee voted to decrease the rate to a historic low of 0.5 per cent.

Chancellor George Osborne recently told BBC News that a housing bubble could undermine the recovery of the UK economy and that it is vital for the government and the Bank of England to keep a firm eye on rising property prices.ADNFCR-1222-ID-801728952-ADNFCR

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