House prices to increase 16% by 2015
Share
Cebr’s new forecast for house prices shows a 1.4% fall in 2011 but then a recovery that will generate a four year rise in prices of 16% between 2011 and 2015.
The forecasts are contained in Cebr’s latest issue of its Consumer and Housing Prospects released today.
The report also predicts sluggish consumer spending in the UK with a 0.8% fall in 2011 and growth at a relatively low average rate of 2% from 2012-15.
The report predicts that the volume of food sales this year will fall for the second year running, though by only 0.1% this year compared with 1.3% in 2010, and that the growth in clothing sales volume will fall to 3.3% this year, one of the slowest rates of growth in recent history.
Douglas McWilliams, chief executive of Cebr, says although it believes house prices will fall this year, there are signs that prices will stabilise over the second half of the year and it thinks the market is currently close to the bottom for the UK as a whole.
He says: “The main factor driving house prices up is the shortage of available housing which has already pushed up rents. Housing completions fell to only 130,000 in 2010, well below the level required to keep pace with demographic change.
“International demand will also remain a factor, particularly in London and with the pound forecast to remain low, and London likely to remain internationally attractive, this is likely to continue to boost house prices in the capital, which are forecast to rise about 2% a year faster than for the UK as a whole.
“But the factors that will ultimately drive house prices up again are the loose monetary policy that will accompany the government’s deficit reduction and the ability of banks to lend again on consumer friendly terms as their own underlying financial position improves.
“This should not be confused with boom and bust. We are forecasting a gradual four year recovery at an annual rate of about 4%.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
Readers' comments (4)
dannysapiano | 31 May 2011 9:21 am
The way in which rising house prices are regarded as a good thing symbolises all that is wrong with the UK housing market.
For all those people who've found themselves completely priced out of the market, the only 'recovery' they are hoping for is a return to affordable house prices. Fortunately, it doesn't seem too far away.
Unsuitable or offensive? Report this comment
Gregor from Edinburgh | 31 May 2011 10:07 am
Better stir the tea-leaves again ! This is bunkum.
House prices have been artificially sustained by government interest rate policy. That is going to end very soon. Long-suffering savers will not agree to pay home-owners mortgages much longer.
When that haoppens house prices will correct to a sustainable level which must be at least 20% below current so-called valuations
Unsuitable or offensive? Report this comment
Simon Ropner | 1 Jun 2011 3:58 pm
Prices will stay high for the simple reason that we live in a tiny country with high immigration and we are already full up. People should simply learn to rent and not own - as they do in Japan - and invest what CAPITAL they WOULD have put into the housing market into the stock market.
Unsuitable or offensive? Report this comment
Robert at Yorkshire Surveyors Limited | 2 Jun 2011 10:48 am
It's simple supply and demand. Pent-up demand is being suppressed by the lack of mortgage products but as these come back to market (provided sovereign debt doesn't hit the banks and cause another crisis of liquidity), then this demand will return to the marketplace. Lack of available land to build on in the UK because we like our green spaces means that prices will always be relatively higher here than, for instance, the USA. The problem for most first time buyers who drive the market is the large deposits required - but this will ease as more 90% and 95% LTV mortgages appear on the market.
Unsuitable or offensive? Report this comment