CEBR revises house price forecast

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by Kay Mitchell

Leading economic forecaster, the Centre for Economics and Business Research (CEBR), said it expects house prices to rise more than 6% during 2010 and be around 20% higher by the end of 2013.

Many housing experts are divided on their views with regard to the recovery in the market. Many were surprised by the strength in house prices over the last six months or so after several leading experts had predicted falls of around 10% for the 2009 year.

However, house prices rose in the latter half of the year as a result of higher demand and a shortage of properties up for sale.

The gains seen in house prices has led the CEBR to revise its forecast of 2-4% growth made just a few weeks ago.

Benjamin Williamson of the CEBR comments: “The fact that house prices have already risen by almost 10% since the bottom of the cycle has surprised most commentators.

“However, with the rate of mortgage lending more than doubling over this period of time, a shortage of new properties on the market, low interest rates and unemployment not rising nearly as fast as expected, it is easy to see how prices have moved so quickly,” he added.

“This combination of factors will continue to push prices up during 2010, albeit at a more modest rate than we have seen over the last six months.”

In December, the Royal Institution of Chartered Surveyors (Rics) said it expects house prices to rise by 1%-2% in 2010.

According to the Institution, there will be gains in the early part of the year but this will be followed by modest falls in the latter half of the year, resulting in a small overall rise of 1%-2%.

Today, housing intelligence group Hometrack said house prices in England and Wales grew by just 0.1% in January compared with the previous month.

However, the group said the rise was fuelled by activity in London and the south while prices in the rest of the country remained flat.

In comparison, last week the Nationwide reported a 1.2% rise for the month of January compared with December.

According to the Nationwide, January’s gain takes the annual increase to 8.6% – the highest since October 2007.