House Prices in Yorkshire and Humber may rise at half the pace of estimates for 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.
Estate agents Savills has pointed to a two per cent increase in the next year, while the Confederation of British Industry is more optimistic at 5.3 per cent.
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 currently 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.
While the Government’s stamp duty announcement at the Autumn Statement is “very positive”, Mr Hill said it is unlikely to have the wider ranging impact of 2013’s Help to Buy scheme.
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.
‘Complete rethink’ needed to address home building shortfall
Radical action must be taken to bring house construction up to the necessary level, Strata chairman Irving Weaver said.
Speaking at The Yorkshire Post Business Club event on the future of the housing market, Mr Weaver said it was widely agreed 250,000 homes were needed per year.
However, the sector has not delivered properties at this scale since 1979, which included large-scale social housing projects.
In 2013, 110,000 dwellings were started. Based on the 12 months to March 2014, this year is likely to deliver between 130,000 and 140,000 homes.
At the height of the construction market in 2006, there were 183,000 starts, meaning the current market is around 25 per cent lower.
Mr Weaver said: “We’ve got a generation of first-time buyers caught in monthly rental costs. We’ve got a growing belief that home ownership is beyond reach and deteriorating housing stock and lack of social mobility.
“We’ve got lots of challenges. I don’t know if we’ve got the answers.
“It’s going to take a complete rethink of how we get our industry back up to 250,000 when we haven’t achieved that for going on to 40 years.”
Currently, the top 20 home builders by turnover produce 83 per cent of new housing.
The current environment does not support growth from small and medium-sized companies and new entrants. However, the North has been impacted by “a big move south” from major players, including Persimmon, which closed its Beverley and Doncaster offices.
Costs and skills shortages are severely hampering the sector, Mr Weaver warned.
“We haven’t trained anybody for five years. We’re really breaking at the seams,” he said.