House growth forecast triples

By Jessica Winch

Rightmove started the year forecasting that average national asking prices would rise by 2pc over 2013. The property website, which advertises more than 800,000 properties nationwide, now believes prices are set to increase by 6pc, having previously raised its outlook to 4pc in July. 

The data reinforce a sense of recovery in the housing market, but will add to growing concerns that a bubble could be forming. 

A number of leading figures, including Vince Cable, the Business Secretary, have warned that the rapid increase in the value of property poses a potential risk to the economic recovery, calling into question the Government’s plan to extend its Help to Buy initiative. 

But the Government is adamant that the housing market is a long way from overheating, and plans to continue with its policy of providing support for first-time buyers. 

Nick Clegg, the Deputy Prime Minister, rebutted concerns in a television interview over the weekend, saying that both the Government and the Bank of England have the means to prevent a property bubble from emerging as a real risk. 

Rightmove’s updated forecasts follow calls from the influential trade body for estate agents and surveyors, the Royal Institution of Chartered Surveyors (Rics), which last week urged the Bank of England to limit house price growth to 5pc a year to stop households taking on excessive debt for fear of missing out on a price boom. 

The Bank of England’s Financial Policy Committee will meet on Wednesday, when it will reportedly discuss the issue of a housing bubble and what action it could take. 

Asking prices in London are up 8.2pc on a year ago, according to Rightmove, while in the West Midlands they have increased by 6.8pc, in the South East by 5.6pc and in Wales by 3.8pc annually. 

The only two regions in England and Wales not to see an annual increase in prices in September were the North, where prices were flat, and Yorkshire and Humberside, which saw a 1.3pc fall. East Anglia saw the smallest annual increase, at 0.8pc. 

Prices rose by 1.3pc year-on-year in the South West, by 1.7pc in the North West and by 2.9pc in the East Midlands. 

But the property website said that asking prices fell by 1.5pc in September to £245,495 on average, following a 1.8pc drop in August due to a “summer holiday slowdown”. 

Prices are still 4.5pc higher than this time last year and have increased by £16,000 so far in 2013. 

Rightmove director Miles Shipside said some buyers with decent deposits would try to buy a property before Help to Buy, which provides government guarantees for mortgages offered to buyers with small deposits, increases competition from next year. 

“As a result, we forecast the national average increase in new seller pricing for the whole of 2013 to be in the region of 6pc, partly driven by the strength of southern markets but increasingly contributed to by the more buoyant areas of the North,” he said. 

A separate report from the Building Societies Association (BSA) has found that more than 60pc of people now believe house prices will rise in the coming year, the highest proportion since it began collecting the data in 2008.