Property market predicted to prosper - Economy - News - Moneyfacts


Property market predicted to prosper

Property market predicted to prosper

Category: Economy

Updated: 19/04/2011
First Published: 19/04/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

House prices have edged up slightly in the first three months of the year, as a result of recent falls in inflation and unemployment boosting consumer confidence.

The average UK house price is now £197,153, up from £195,420 at the end of 2010, according to the latest Assetz House Price Watch, which is compiled using monthly average figures from five of the major house price surveys.

This means prices have increased by £1,305, or 0.67%, since the start of the year.

The figures suggest the property market has been remarkably resilient despite the Government's spending cuts beginning to take effect.

Furthermore, the firm said it expects prices to continue to increase in the coming months as a consequence of a number of new mortgage funding schemes and some better news stories regarding the economy.

FirstBuy Direct is a new Government scheme which will allocate a share of £250 million to at least 10,000 first time buyers, and is expected to work in tandem with a number of other shared equity schemes currently available, to increase demand at the bottom of the market.

Meanwhile, confidence amongst consumers has received a welcome boost in recent weeks as a consequence of the fall in the rate of inflation and unemployment.

The bullishness of home-sellers when it comes to pricing a property for sale is also noted as a reason to be optimistic.

Despite the fall in inflation easing the pressure on the Bank of England to raise interest rates, the group said it still expects a rate rise of 0.25% in the next few months.

However, while mortgage repayments would see a slight increase as a result, Stuart Law, chief executive of Assetz, believes it will have a negligible impact on homeowners and prospective buyers who will continue to benefit from historic low rates.

"Interest rates are unlikely to exceed 1% this year in order to compensate for recent tax increases and spending cuts," he added.

"These low rates will continue to support house prices and consequently, unlike many commentators, we still expect values to increase by around 5% this year."

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