House prices may rise at half national rate in 2015

Peter Hill, Leeds Building Society

Peter Hill, Leeds Building Society

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House Prices in Yorkshire and Humber may rise at half the pace of national increases in 2015.

Peter Hill, chief executive of Leeds Building Society, said home values in the region would likely climb between two and three per cent next year, compared to a national average of four per cent.

The mutual’s national predictions are less than half the national annual increase for 2014.

National predictions for the housing market in 2015 vary dramatically, with the Office for Budget Responsibility forecasting a 7.9 per cent rise, while the Centre for Economics and Business Research pointing to a 0.8 per cent contraction.

Leeds Building Society’s outlook of four per cent is “a fairly realistic, conservative figure”, Mr Hill said.

Mr Hill, who is chairman of the Northern Association of Building Societies and deputy chairman of the Council of Mortgage Lenders, told The Yorkshire Post Business Club that consumer confidence and the affordability of mortgages would continue to temper upward pressure on prices.

Yorkshire and the Humber has been “consistently below” the national average rises in recent years, he said.

He said: “We’ve seen a pretty flat, or stable, house price environment in Yorkshire and the Humber. If we look back over 2014, with all the noise regarding London house prices shooting ahead, driving the UK market - here in Yorkshire, we’ve been down in the sub-two per cent range to September.”

The housing market has seen varying fortunes through the year, as activity slowed in the second half of the year.

The November Halifax house price index showed the annual price increase for 2014 standing at 8.2 per cent. However, the monthly changed has fallen for four consecutive months.

Short supply of homes, continued strong demand for properties and the availability of high loan-to-value mortgages will continue to positively affect house prices, Mr Hill said.

But the upcoming general election, Eurozone uncertainty and potential rising interest rates are hitting consumer confidence, as potential buyers hold back on big decisions.

As well as “fickle” consumer confidence, there are systemic issues around affordability and regulation that could hold prices down, Mr Hill said.

The Financial Conduct Authority (FCA) introduced more stringent lending criteria earlier this year as part of the Mortgage Market Review.

Mr Hill said: “Because of the fact that all new mortgages are assessed at a stressed rate of interest, there is quite a lot of restraint around customers’ ability to stretch themselves.”

The policy has “blocked out” people who previously saw themselves as borrowers, he added.

- Watch the video online at www.yorkshirepost.co.uk

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