1
Feb
House prices to rise far sharper than previously predicted.
The average house price is expected to climb from £167,000
to £178,000, an increase of 6.5 per cent, predicts the Centre
for Economics and Business Research.
This increase is far larger than the think tank predicted just
four months ago, when it thought house prices would nudge up by 2.6
per cent.
It now believes that prices will return to their previous 2007
high of £198,000 during 2012, a year earlier than it
previously thought.
The CEBR is not the only organisation being forced to alter its
outlook, after the property market wrong footed nearly every expert
last year – defying the recession to recover strongly.
Last week the Nationwide building society predicted house prices
could soon climb 10 per cent on an annual basis because of the lack
of supply, with many home owners nervous about putting up their
house for sale.
The CEBR said it expected banks and building societies to
approve more mortgages, making it easier for buyers to access the
money needed to purchase a house, in turn helping to push up
prices.
The think tank predicts around 72,000 mortgages a month will be
approved by the end of the year, up from about 60,000 now, and a
low of just 33,000 or so during the worst of the slump.
It said while this level of approvals was still well below
pre-credit crunch levels, it was likely to lead to a "sustainable
growth path" for house prices over the medium term.
Benjamin Williamson, one of the report's authors, said: "The
fact that house prices have already risen by almost 10 per cent
since the bottom of the cycle has surprised most commentators.
"However, with the rate of mortgage lending more than doubling
over this period of time, a shortage of new properties on the
market, low interest rates and unemployment not rising nearly as
fast as expected, it is easy to see how prices have moved so
quickly.
"This combination of factors will continue to push prices up
during 2010, albeit at a more modest rate than we have seen over
the last six months."