House Price Forecasts (Or Crystal Balls?)

It's that time of year again. The high-end estate agents are inviting journalists in to their West End of London offices to reveal their forecasts for the coming year.

Like most journos, I will be reporting the predictions (on this blog, as well as in articles) but I have to ask: is it even possible to forecast accurately in a global financial climate buffeted by domestic factors like Help To Buy and international factors like the Chinese or US economic fluctations? Is it all simply too unpredictable?

A look at last year's forecasts for 2013 does not reflect well on some of the high-end agents: some were hopelessly wrong for the year now finishing but credit to Hamptons International and Jones Lang LaSalle for at least predicting some mainstream price rises.

But a forecast is, after all, just that - a forecast. It is undertaken usually by excellent researchers (in all the agencies below, and in others) after huge effort. I believe their forecasts represent skilled and thoughtful analyses.

Yet just as I believe too many monthly and quarterly price indices are influenced by other (often commercial) considerations, so many of the annual predictions are inevitably buffeted off course, sometimes within a few weeks: you can only forecast up to a point, Lord Copper.

So I'm looking forward to the 2014 analyses and you can read them (probably first) on this blog. But put them in context: things change, and quickly, and the agents' forecasts for 2013 did not quite come true, as you can see below...

Jones Lang LaSalle forecast for 2013:

- mainstream UK house prices up 1% in 2013;

- "accelerated growth" from 2014 onwards;

- 115,000 completions being delivered in 2013, only half of England’s housing requirement;

- rental growth patchy in 2013 but stronger (UK annual average rise 3%) from 2014.

Savills forecast for 2013:

- no change in Prime Central London values in 2013 "with growth resuming in 2014";

- mainstream house prices will rise 11.5 per cent in the next five years although after inflation that represents a real-term drop of three per cent.

- average rents across the UK will rise 2.5 per cent in 2013 and 18.2 per cent by end 2017.

Knight Frank forecast for 2013:

- mainstream UK house prices to drop two per cent in 2013;

- no change in Prime Central London;

- East Anglia down 0.7% in 2013;

- East Midlands down 1%;

- London down 0.6%;

- North East England down 2.3%;

- North West down 2.6%;

- Scotland down 3.2%;

- South East England down 1.1%;

- South West down 2.2%;

- Wales down 3.8%;

- West Midlands down 2.1%;

- Yorkshire down 1.8%.

Hamptons International forecast for 2013:

- UK house prices up two per cent in 2013;

- Greater London and Prime Central London staying static, so no change;

- Total England/Scotland/Wales transactions to be 720,000;

- UK rental market will remain static;

- Greater London rental market up 2% but Prime Central London rents down 1%.

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