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House prices tipped to climb higher in 2011

House prices tipped to climb higher in 2011

Category: Mortgages

Updated: 04/04/2011
First Published: 25/01/2011

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Homeowners can expect to see the value of their properties increase by an average of £10,000 over the coming year, the latest forecast for 2011 has suggested.

House price growth of 5% has been predicted over the next 12 months, after the Assetz House Price Watch survey for December showed values had increased by an average of 1% over 2010.

The survey, which collates the findings of the house price indices from Halifax, Nationwide, Rightmove, CLG House Price Index and LSL Acadametrics, found the average UK house price in December was £195,804.

A near two year high of £201,860 was reached in July, but prices dropped away in the second half of the year.

As a result, by the end of 2010, they remained 9% down on the market peak of £215,089, reached in October 2007.

Stuart Law, chief executive at Assetz, said it appeared the election and comprehensive spending review had hit the market harder than expected.

However, he added it did appear that the monthly falls may be bottoming out.

"House prices may continue to pull back slightly in the first few months of this year, as they did in the last quarter of 2010, but we still do not expect to see a 'double dip' in the market, which would mean prices falling below the recent trough witnessed in March 2009," Mr Law explained.

"The acute housing shortage and rental squeeze remain the key medium-term drivers in the property market's recovery, underpinning prices for the foreseeable future. As positive forces continue to outweigh the negatives we still forecast house price growth of 5% for 2011."

Meanwhile, John Charcol predicts that house prices are likely to end the year with a small net gain of around 2%.

The mortgage broker expects house prices to drift slightly lower in the first half of the year, but believes low interest rates will prevent a significant fall.

"By the middle of 2011 the negative impact on consumer confidence of the public sector spending cuts will have largely worked its way through the system and the fall in consumer confidence is likely to have reached its nadir," said Ray Boulger, senior technical manager at the firm.

"Consumer confidence is only likely to improve slowly but any improvement will result in some increase in demand for housing and a modest recovery in prices, subject to reverberations from any major Eurozone default."

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