Housing transactions “ set to pick up” forecast
A think tank is predicting that housing transactions will pick up this year to a million.
Ernst & Young’s Item Club is forecasting a 7.5% rise in house sales this year, with a further 7.8% rise next year, to take transactions to 1.08m.
Although HMRC has reported a rise in house sales, house purchase mortgage approvals have been falling, according to the Bank of England – suggesting that there must have been more cash transactions.
However, according to new research, the number of cash purchasers dropped significantly in the first three months of this year. It found that 35% of its purchasers were cash buyers, down from 41% in the first quarter of last year. In London, it says 50% of purchasers were cash buyers, down from 65% in the first three months of 2012.
While there is an obvious clash of interpretation as to what is going on in the housing market, the Item Club says its predictions are based on moves by the Chancellor to stimulate the housing market.
Peter Spencer, chief economic adviser to the Item Club, said: “Although it’s not a long-term strategy, stimulating the housing market and the high street will keep GDP growth positive.”
He added that much of the criticism of the Chancellor’s Help to Buy scheme, which will make 95% mortgages widely available from next January, had been “ludicrous”.
He said: “The idea that Help to Buy is going to stoke up another boom in house prices is just inconceivable in the current circumstances.
“Housing is generally affordable and arguably the risk to Generation Rent is that they will miss out if they don’t seize the opportunities provided by the Budget.”