Residential Property News

11th November 2010
Homeowners fearing a property slump could take some succour today from a report predicting house prices will be 16% higher by the end of 2014.

The Centre for Economics and Business Research expects the property market to only edge up next year, appreciating 2.2%, as unemployment increases on the back of public sector cuts and household incomes remain under pressure. But it expects house prices thereafter to gain momentum from low interest rates, Bank of England cash injections and the shortage of properties in the UK.  

It comes as recent house price data has given an uncertain picture of the state of the property market. Halifax last week reported a sudden 1.8% rise in the average cost of a home in October, after a massive 3.7% plunge in September.

Nationwide earlier reported its house price index fell by 0.7% in October, due to a lack of buyers, knocking 2,400 off the average price of a home.

Douglas McWilliams, chief executive of Cebr, said: 'Quantitative easing is a very powerful medicine and is likely to have a strong impact on the housing market eventually.

'House prices may not move much during 2011 but they are likely to rise significantly in the following three years on the back of quantitative easing to offset the impact of the fiscal retrenchment.'

The group expects house prices to end this year just under 7% higher than they started it, at an average of 179,411.

Sluggish growth in 2011 will be followed by stronger increases of 4% in 2012, 5.4% in 2013 and 4% in 2014, to leave the average property costing 208,816.

Cebr said a decision by the Bank of England to embark on a fresh round of quantitative easing would reduce long-term interest rates and help to boost mortgage lending.

As a result, it expects the number of mortgages advanced each month to rise from its current level of just 47,000 to around 77,000 by 2014, although this figure is still below the peak of 119,000 reached in 2006.