Hometrack 2014: Demand, London and Lending Key To Coming Year's Market

Three key factors will determine the rate of house price growth in 2014 - whether recent increases in demand can be sustained, whether London's market remains strong, and what happens to mortgage availability.

That is the (perhaps underwhelming) view of property consultancy Hometrack in its forecast for the year ahead.

"While much has been made of the impact of Help to Buy, the underlying driver of recent house price growth has been record low mortgage rates which have given households significant buying power. The ending of Funding for Lending for mortgages means a move to market-based funding for mortgages" claims Hometrack's research director, Richard Donnell.

He says the outlook for mortgage rates depends upon where money markets expect interest rates to move, while the high-profile guidance which is increasingly obvious from the Bank of England will ensure the debate remains in the public eye.

"We expect the momentum in house price growth to spill over into 2014 supported by a continued lack of supply and rising demand. The strongest market conditions and impetus for price inflation is set to remain focused on southern England in 2014. A broader based recovery in the housing market is dependent upon growth in the real economy, jobs and household incomes" says Donnell.

Hometrack was once a keenly-anticipated forecaster of the UK housing market. But in recent years its low-key predictions (and its heavily-publicised monthly index) have been regarded by some observers as merely a way of consolidating the Hometrack brand while the firm itself concentrates on its core business of selling automated valuation and real estate-related risk analysis consultancy.

Donnell remains one of the most respected and long-standing housing market analysts but some high-end estate agencies with their own research departments remain privately critical of Hometrack's price index methodology, which is based on an 11-question survey of participating selling agents.

If you would like to to comment on this article, click HERE to e-mail Graham. Follow PropertyJourn on Twitter