Forecast For House Price Recovery
According to the CEBR, the end may be in sight for falling house prices. It forecasts a halt to falling prices in 2009, followed by three years of growth, leading to record prices once again. The NHF backs the forecast with similar projections of its own.
A recent report from the Centre for Economics and Business Research (CEBR) has forecast that the slump in house prices will come to a halt in 2009, and be followed by three years of rising prices, giving a combined rise of 30%.
The forecast will be welcome news to beleaguered homeowners, weary from months of gloomy housing market pessimism.
If the figures are correct then by 2012 the average house price will be up to a new peak of £226,000. Those home owners who have bought in recent years will be particularly buoyed by the news, as they will see any problems of negative equity disappear, although it is still expected that 1.7m homeowners will be in negative equity at the bottom of the slump. Sadly, many people have already seen their home repossessed in the current market dip, but others should be able to ride out the problems.
According to the CEBR, a lack of new homes will boost the recovery in the market. As housebuilder after housebuilder announced problems in recent months, they have all but stopped building houses, saying there is little point in building if no-one is buying due to the absence of available mortgages and a lack of confidence. Nevertheless, demand for new housing continues to grow, as immigration continues and the number of singles and single parent families also rises.
It is also possible that the Bank of England will try to hold interest rates at 5% for the rest of this year, and look to cut them in 2009, possibly down to 4.25% in stages. That will help the mortgage market, but even before that, mortgage providers are likely to try and re-engage in mortgages to bring their own mortgage profiles out of stagnation.
The National Housing Federation expressed similar views to the CEBR recently, saying that the recovery would begin in 2010, with a rapid rise in 2011.
