House prices predicted to soon top 2007 peak

Published: 06/06/2011

While the predicted heat wave at the weekend proved correct, the real hot tip this week is the forecasted 16% increase in UK houses prices over the next four years, taking them above 2007’s high, according to the Centre for Economics and Business (CEBR).

While a further dip of 1.4% is expected in the property market by the end of the year, experts believe this “will be the turning point” and a 4% year-on-year surge is on the cards to mark the start of 2012.¹

In the current market, the average UK house price is £175,000. If CEBR’s calculation is correct then this figure should rise to a staggering £205,643 by the end of 2015, vastly surpassing the 2007 high of £191,340.

CEBR believes the ‘lack of new homes under construction’¹ is sufficient evidence to support this ambitious claim.

Douglas McWilliams, Chief Executive at CEBR said:

“We still believe house prices will fall this year, although there are signs prices will stabilise over the second half of the year.

“We think the market is currently close to the bottom for the UK.

“The main factor in driving house prices up is the shortage of available housing – which has already pushed up rent. Housing completion fell to only 130,000 in 2101, well below the level required to keep pace with demographic change.”¹

Let’s just hope McWilliams’ forecast is not another Michael Fish circa 1987!

Source:
¹Mortgage Solutions (May 2011)

Content correct at time of publication