Not many people would quibble with two forecasts for house price increases that differ only by 2 per cent. But as the Nationwide predicts an average 7 per cent increase for 1998 and the Halifax 5 per cent, it is interesting to note that as our chart shows they varied as much as 6 per cent in 1997.
Despite both having started the year predicting 7 per cent, the Halifax now puts the average increase between 5.5 and 6 per cent, while the Nationwide reports a 12 per cent rise.
Rarely have these two major mortgage lenders found themselves so far apart. A major reason is thought to be the London and south-east factor which features more heavily with the Nationwide. In September, for instance, as the Halifax was putting house price inflation in the south-east at 16 per cent for the year, so East Anglia registered at 7.6 per cent and Scotland at 0.8 per cent.
Some parts of central London though saw 40 per cent increases, a scale which caught most people by surprise and has pushed the average to between 18 per cent (De Groot Collis) and 20 per cent (Knight Frank).
Next year, a cooling off at the top of the market is expected. Stamp duty increases in April, overpricing on some properties and uncertainties in the stock markets are all seen as factors. This year's mixed picture should be replaced by a less volatile, more broadly based growth. Savills, whose predictions tally with the Nationwide's current 12 per cent, sees central London prices rising by 4 per cent with the average across the country increasing by 9 per cent.
But how accurate were the pundits last year and how do they read the trends for '98? Yolande Barnes, Savills Research (prime central London was predicted to rise by 7.4 per cent this year and country houses by 14 per cent) says, "In the Home Counties we had seen just over 18 per cent by the end of September as London money moved further out along the main communication links to London. Country house prices were also boosted by strong local economies.
"Prime central London was another story. Our figures were reached in the first quarter but we are not ashamed of the theory that the market would slow down. The signs are that the market is fully if not overvalued. We expect to see an upturn in provincial properties next year with more people coming into the quality league having built up nest eggs. They are not borrowing as much and so can afford to outbid the competition. Purchasing power is high."
David Woodcock, Black Horse Agencies (last year they predicted sharp rises due to demand but an average rise of below 10 per cent): "The reality was an exceptionally buoyant market in London and surrounding areas, with dramatic rises and demand outstripping supply. We are cautiously optimistic for '98, but the principal cloud is that interest rates will continue to rise. But since the risk of a sizeable rise is fairly low, people will still be able to sell. Hanging on in the hope of obtaining a higher price is unlikely to lead to significant benefit. Across the eastern and Midlands regions Black Horse expects increases between 5 and 7 per cent with some hotspots. In the north prices should start to rise steadily at a rate between 3 and 5 per cent."
Bill Hughes of country division Cluttons Daniel Smith (in London they predicted 10 per cent, with some properties increasing by 20 per cent): "We are not as bullish as last year. Job losses in the banking world could have a regional impact in the middle ranges. There is still huge pent- up demand and in the pounds 450,000 market we expect rises of about 7 per cent, but in the pounds 750,000 to pounds 1.2 million between 7 and 10 per cent."
Ian Darby, John Charcol, mortgage advisers (Predicted price rise of 5 to 6 per cent and interest rate rise of 8.75 by end of this year. Rates now stand at 8.7 per cent): "I can see a potential for another rate increase and the likelihood of some rate falls later in the year ending with a mortgage rate of 8.49 per cent."
Ian Homersham, John D Wood (Predicted prices rising by about 12 per cent): "Confidence has returned generally and short of a serious stock market crash there is no reason why the market should lose any of its momentum. We predict increases ranging from 2 per cent to 5 per cent in Fulham and between 10 per cent and 15 per cent in Mayfair."
Chris Palmer, managing director Hampton International. "My view is that 1998 will be a year of two halves, with a slight dip in prices in the early part which in conjunction with unrealistic vendors may cause a hiatus in the market. Barring any horrific measures in the Budget we should see a strong second half with an overall increase of 5 per cent."Reuse content