Forecasters Item Club predict that more than 1m will move home in 2013

Forecasters Item Club predict that more than 1m will move home in 2013

Whilst economic forecasts remain gloomy, it appears that there is a glimmer of light to be found in the housing market.

The Ernst & Young Item Club has predicted that although house prices will not rise this year, the market will pick up. It estimates that more than one million families will move home during 2013, representing an increase of 7.5%. This welcome piece of property news means that this year will see the largest number of property transactions since the financial crisis began.

The Item Club has cited a number of factors for this increase, not least the “Help to Buy” Scheme recently launched by the Chancellor in his April budget. The scheme will see a £5.4bn package of government funding put into the housing market in two ways. There will be equity loans, where the government will lend up to 20% of the cost of new-build homes. And the Mortgage Guarantee Scheme is designed to incentivise lenders to lend to those with smaller deposits.

The Equity Loan Scheme launches in April 2013 and is available to those with a 5% deposit who are purchasing properties worth up to £600,000. The Mortgage Guarantee Scheme is due to launch in January 2014.

Whilst concerns have been raised in some quarters that property news such as the Help to Buy Scheme could result in prices rising without an increase in supply, making it more difficult for first-time buyers, the Item Club has dismissed these claims.

Instead, it believes that the scheme will increase the number of transactions, particularly on the lower rungs of the housing ladder, where raising a large enough deposit to secure a mortgage has proved difficult for many.

With houses becoming more affordable again, a rise in disposable income and greater availability of mortgages, the Club predicts price increases of 2.1% next year and 5% in 2015.

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