This has been a banner year for the UK property market and after a period of repressed values and low demand, it has come as a breath of fresh air to potential buyers and those considering property investment. Indeed, bricks and mortar has emerged as one of the safest bets when it comes to asset classes.
But in a year of headline-grabbing facts and figures about the real estate market, which stories have stood out from the crowd and made us sit up and take notice?
Help to Buy
It's impossible to talk about property in 2013 without mentioning the government's Help to Buy scheme. Heralded as the driving force behind the return of buyers to the market and the resultant price gains, the scheme has received plenty of praise. The initiative has been rolled out in two phases: equity loans and mortgage guarantee. Speaking in October at a new housing development in Northampton, housing minister Kris Hopkins told an audience that the equity loan part of the scheme has seen over 15,000 reservations for new builds in the first six months of operation, giving the market an important kick-start.
Under the first phase of the scheme, buyers can purchase a new build home with just a five per cent deposit by using an equity loan from the government of up to 20 per cent on properties with a value of GBP 600,000 or less. Conversely, the mortgage guarantee works by offering lenders the option to purchase a guarantee on mortgages, where a borrower has a deposit of between five per cent and 20 per cent.
"It’s clear the first part of our Help to Buy scheme, the equity loan, has captured the imagination of the public and is boosting the supply of new homes across the country," Mr Hopkins said. "Our policies on housing are working. House building is growing at its fastest rate for ten years, and the tough decisions we’ve taken to tackle the deficit have kept interest rates low and are now delivering real help to hard-working people."
However, it hasn't all been smooth sailing and it has been reported that there is confusion over Help to Buy. Research from Rightmove has shown that among first-time buyers who claim to understand the second phase of Help to Buy, 23 per cent wrongly believe it only applies to new-build properties. What's more, 22 per cent are unaware that the scheme can be used for homes up to the value of GBP 600,000.
Rising prices and bubble fear
One of the biggest stories of the year is undoubtedly the upwards movement of property prices in the UK and how this - instead of causing celebration - has led to bubble fears. According to Savills, mainstream house prices will increase by an average of 25 per cent over the next five years. Increased confidence will drive a 17 per cent rise in the next three years alone.
What's more, price gains in the UK would be higher if external factors were stronger. Lucian Cook, Savills head of UK residential research, said: "Total five year house price growth will be capped by earnings growth, given the likelihood of interest rate rises that will erode mortgage affordability."
However, there has been concern that the property market is overheating, with the government's Help to Buy and Funding for Lending schemes artificially inflating prices to unsustainable levels. Concern has particularly focused on London, and Home.co.uk claims the average price of a home in the capital is GBP 400,096. Values are 15.3 per cent higher than they were five years ago, rising 11.7 per cent over the year.
Doug Shephard, director at Home.co.uk, said: "London's housing bubble has come about through ever greater sums of cash chasing ever fewer properties over the last five years. Soaring prices may well be welcome news for homeowners who see their equity growing, but, on the flip side, they are highly troubling for potential buyers and create severe downside risk."
Royal Wharf Acquisition
Foreign investors are flooding into the UK and the deal that has set the benchmark for this has been the acquisition of Royal Wharf by Oxley Holdings Limited. The largest mixed-use site to go on sale since Battersea Power Station, when complete the property will be turned into around 3,400 residential units and a variety of commercial, retail, leisure and educational facilities. Ultimately, it will create an entirely new district for London, increasing housing supply.
Ching Chiat Kwong, chief executive of Oxley Holdings, noted: "Royal Wharf is an outstanding opportunity and offers a blank canvas to create something very special for London. It has over 500 metres of river frontage with a Crossrail station 1km away. Oxley now has the opportunity and responsibility to deliver this fantastic project, picking up the baton from Ballymore."
Have you read the Housing Humbug Report? A wry look at the year with a few predictions thrown in...
- Thursday 19 December 2013