As the old joke has it, forecasting is difficult, especially about the future. Just ask the Halifax's housing economists. Obliged in December last year to predict house prices in 2013, they opted for more of the same, or "little change," which they defined as somewhere between minus 2% and plus 2%. In the event, house prices nationally rose in the first 11 months of 2013 by 7%, or about three times the rate of general inflation.
Undeterred, the Halifax is again supposing that current trends will persist, which this time implies a rise in house prices of between 4% and 8% in 2014. There are reasonable arguments behind that prediction, of course. "Low interest rates, and higher consumer confidence due to the increasing evidence that a sustainable economic recovery may now be underway, are helping to stimulate housing demand. Schemes such as Funding for Lending and Help to Buy also appear to have boosted demand," says Halifax's housing economist Martin Ellis.
If anything, though, that 4%-8% forecast looks a little low given that the Bank of England seems determined to leave interest rates at 0.5% throughout 2014. That would seem to allow plenty of time for the madness of the central London market to intensify, and skew the national statistics in the process. London already feels like a bubble – but bubbles can persist longer than you think possible.
