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28 July 2008

House prices expected to recover by rising 25%

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by Kay Mitchell

House prices expected to recover by rising 25%

A new report by the National Housing Federation (NHF) is suggesting that average house prices in England are set to rise by 25% by 2013.

The news will no doubt be welcomed by homeowners currently in negative equity due to the falling of house prices over recent months.

However, homeowners will have to be patient as the report states that prices will continue to fall by 4.4% this year, 2.1% next year and then recovering from 2010 onwards.

The reason for the optimism according to the NHF is the demand for homes as people are living longer, delaying getting married and getting divorced which are all factors driving demand.

However, the predictions differ to those recently forecasted. Some analysts have been predicting falls of at least 7% this year while others have been predicting much higher falls.

The NHF, which represents housing associations in England, explained that once the economic outlook improves, house prices will start to rise again.

According to the Federation’s chief executive, David Orr, rising demand and falling supply will drive the cost of the average home in England to £274,700 in 2013.

According to Mr Orr, only three-quarters of the new homes required were being built each year and this has been having an impact on the availability of affordable homes.

The NHF report reveals that it is critical for the Government to continue to invest in social housing and Mr Orr is urging the Government to support associations in buying unsold properties.

The report from the NHF follows news this morning from the Land Registry that house prices in England and Wales fell 1% between May and June.

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