According to a recent poll conducted by Reuters, housing market specialists anticipate that British home prices will experience modest growth in the upcoming years. The survey indicated that prices are expected to rise by 1.8% in 2024, with even faster growth projected in the following years. This forecast is supported by anticipated reductions in borrowing costs and a lack of supply in the housing market.
One positive aspect highlighted by the survey is the expected improvement in purchasing affordability for first-time buyers. With stable house prices, coupled with real income growth and a predicted decrease in mortgage rates, prospective buyers are likely to find it easier to finance a purchase in the coming year. This is seen as a positive development that could make homeownership more accessible for many individuals.
Despite the positive outlook for affordability, the survey also highlighted challenges in the supply of affordable homes. Experts noted that there is a shortage of entry-level homes in the market, which is expected to persist over the next two to three years. This scarcity of affordable housing options is a significant concern, as it could hinder potential buyers, particularly those looking to enter the market for the first time.
To address the issues of supply and affordability in the housing market, experts suggested that the government should play a more active role. Some of the proposed measures included reducing housing taxes, encouraging office conversions, loosening planning restrictions, and expanding shared equity initiatives. It was emphasized that government intervention is crucial to create a more balanced and accessible housing market for all individuals.
Looking ahead, the survey forecasts a gradual increase in home prices over the next few years. Median predictions indicated a 3.1% growth in 2025 and a 4.0% growth in 2026. Despite this expected growth, the forecasted increases are significantly lower than the peaks seen during the pandemic period when home prices surged by 25%. The subdued projections are attributed to the sluggish economic outlook, but experts noted that deeper interest rate cuts or tax incentives could potentially alter the trajectory of home prices.
Overall, the survey results shed light on the complex dynamics at play in the British housing market. While there are positive indicators such as improved affordability for first-time buyers, the challenges posed by a limited supply of affordable homes underscore the need for comprehensive interventions to ensure a balanced and sustainable housing market for all individuals. As the government and industry stakeholders navigate these challenges, it remains to be seen how the housing market will evolve in the coming years.
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