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HOUSE prices are set to rise by £30,000 as the spiral of “boom and bust” ends and the market returns to growth from next year, leading experts claim today.
Economists predict the cost of the average home will gradually rise 16 per cent to take prices above 2007’s high.
And, in a further boost, mortgage lending will also double as Britain’s finances continue to improve over the next four years. Experts from the respected Centre for Economics and Business Research think-tank predict a return to a sustainable housing market as the high street banks loosen the purse strings to help more people on to the housing ladder
Some more nuggets
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 per cent.” After the global economic downturn following the crash of 2008, house prices have been hit hard across the UK, with the number of mortgages granted to hopeful homeowners slashed.
The CEBR calculates the average cost of a property today is £175,000. By 2015 that will be £205,643. The 4 per cent year-on-year surge is predicted to start at the end of 2011 and carry on until 2015. It would see the average UK house price rise to above the 2007 high of £191,340.
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Mortgage approvals dropped to lows of £69.238billion in 2008 as high street lenders floundered after the global banking crisis. That figure is set to double to £142.11billion by 2015 as the economy picks up.
Mr McWilliams added: “We still believe house prices will fall this year, although there are signs prices will stabilise over the sl be completely different from the lending situation before the credit crunch, with tighter controls. It’s welcome news for the market but it is really down to what happens in the economy.”
Internet property giant Rightmove said: “We are seeing a loosening over mortgage lending and lending criteria. The pre-crash market was too hot. People are going to have to raise large deposits but at the moment the lending criteria is too restrictive.
“We have some hurdles to overcome as some parts of the country struggle with mass unemployment. In other more affluent areas there is a shortage of houses pushing up prices.”
The recovery will not continue at the same pace across the country, Mr McWilliams warned.
London will enjoy a yearly rise of 2 per cent faster than the rest of the country, making the capital see 6 per cent year-on-year gains.
However, areas blighted by Government cuts will see local housing markets stagnate.
Property consultant and blogger Henry Pryor warned: “We have yet to see the bottom of the market. The vast majority of the population are priced out of the market. I would urge caution over the figures but banks will be lending more and competing with each other.”
The predictions came as separate research showed half of people think Britain will become a nation of renters within a generation as young people give up on the dream of home ownership. Around 77 per cent of people who have not yet got on the property ladder still aspire to buying their own home, a study suggested today. But 64 per cent think they have no prospect of this, according to high street bank Halifax.
Instead, 46 per cent of 20 to 45-year-olds said they thought the country was becoming more like Europe, where renting is seen as the norm, and Britain would be a nation of renters within a generation.
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Our children will never be able to afford their own homes, yet they will still be expected to pay their taxes toward those pensioners who do own their home.
Be under no illusion. This is ABSOLUTELY NOT sustainable.
• Posted by: nixy • Report Comment
16% IN 4 YEARS
Further down in the article it says this rise will be over 4 years, so 4% a year, hardly soaring,only just about ln line with inflation.I certainly wouldn't buy now unless I had to, prices have further to drop.
• Posted by: gibbos23 • Report Comment
Of course there's the possibility that the few houses that sell will do so at higher prices particularly in hotspots, the problem is the majority of properties that come to the market won't sell because potential buyers just can't afford them. so most of the dreamers will have a long long frustrating wait to sell.
• Posted by: David16 • Report Comment
THE BEST FRONT PAGE OF 2011
This news has certainly made my day. For some long we have endured negative renters trying to talk down the price of our homes. I'm glad home owners stuck to their guns and did not allow prices to fall. The government did the right thing in supporting the hard workers. We could not allow prices to fall. The UK would have been in a hell of a state. With mortgages becoming easier to get I hope we can see a return to the good times. Free up some equity and have a spend up. Be great to see a few new 4x4's around.
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