London house prices barely slowing in 2014

 
Tim Wallace
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HOUSE prices in the capital will continue to soar next year, rising by up to seven per cent, estate agent Marsh and Parsons predicted yesterday.

The agency has 18 buyers on its books for every prime London property, well up on the 13.5 a year ago and a level which will keep the market rising.

The improving economy and falling unemployment combined with government support for mortgages will keep the market going further, the forecast said.

However, next year’s growth of between five and seven per cent is down from the 10.5 per cent rise in prices seen this year.

Most of 2014’s rise in prices will come in the first half of the year, the agency forecasts, before slowing a touch.

“London’s housing market saw a substantial uplift in 2013, and we expect a similarly strong start in 2014 to drive an annual rise in prices – but these won’t be as spectacular as last year,” said Marsh and Parsons’ Peter Rollings.

“With ongoing support from Government initiatives, the rate of growth will remain sustainable. Following improvements in unemployment levels, we’re likely to see modest increases in interest rates next year.”

As well as a lack of building, one key factor stopping houses coming to market is their own owners’ fear the fast market will make it difficult for them to move to a new home.

Meanwhile the Bank of England said the stock of residential loans – largely mortgages – increased by £6.5bn in the third quarter compared with the same period of 2013 to £1.23 trillion.

New mortgage loans hit £49.5bn in the quarter, up 25 per cent on the year.

Bank of England governor Mark Carney last month ended the Funding for Lending Scheme support for mortgages, removing the cheap funding for bank lending.

He said the funding problems in the sector which prompted the scheme’s launch in 2012 are now solved.