After a year of stagnant pricing and implementing new government measures to encourage sales, UK property analysts are scratching their heads and reconsidering their forecasts.
According to national senior economist Robert Gardner, who administers the Nationwide House Index, the market is "unusually volatile." car for sale
The UK property market continues to increase amid post-recession doldrums beyond London. Few new home developments are of little interest and both buyers and sellers are apprehensive about another European tragedy on the horizon.
In the hope of boosting activity, especially among buyers who cannot afford a penthouse in London, the government has introduced two financing initiatives aimed at adding liquidity to the market, financing of loans and the new buying aid, giving prospective home buyers less than £600,000 interest rate free loans over five years to support deposits.
Critics say these initiatives would merely boost existing house prices while not encouraging new construction. Chancellor George Osborne nevertheless defended the effort last week in the House stating that supporting an out-of-control industry is vital and described a market where most potential purchasers cannot afford to buy a property.
"When you look at the housing market in the United Kingdom right now, there has been a halving of first-time buyers, a triple deposit required and a doubling of first-time buyers' deposits as a percentage of incomes," said Mr. Osborne.
The latest business projections in the UK are not optimistic. The average price for a London house has grown last year by £22,000 to £371,000, while overall prices in the United Kingdom have increased by 1% to £162,606.
The story in the other daily articles is similar. Prices stayed steady in March, but up 0.8% year-on-year in the Nationwide House Index, which was hardly a reason to celebrate. It was the first year-over-year increase in the index since February 2012.
While demand increases have been reported by the Royal Institute of Chartered Surveyors and others, the land registry data indicates that the number of transactions remained less than half that in the peak years.
According to the Bank of England, these are "promising" indicators and "thawing symptoms."
However, analysts are split on the status of the economy, due to a host of contradictory statistics and the present crisis in Europe.
According to optimists, increasing demand and higher pricing would create confidence in the industry among lenders and builders.
According to Richard Donnell, Hometrack's research director, "reduced mortgage rates have encouraged higher investment as a result of FLS [Lending Fund]."
On the other hand, Mr. Donnell does not seem to be swayed. "While the lack of houses, loans and new housing will help to sustain price levels," says Donnell, "accessibility and deposit levels continue to be key obstacles to a full-scale recovery."
There are also other analysts at the fence. Jonathan Samuels, Chief Executive Officer of Dragonfly Property Finance, said that the loan scheme and assistance for purchasing have established a "degree of market expectation." He warned against overconfidence, though.
"The combination adds additional volatility to the eurozone, and the conclusion is that the impression of the property market is divorced from actuality," said Mr. Samuels.