House prices to ‘rise 20 per cent by 2014’

Category: Mortgages
Date: 8/3/2009

House prices in the England will continue to fall during 2009 and 2010, but will rise by 20 per cent by 2014, according to a forecast by the National Housing Federation.

Research by the federation has concluded that property prices will drop by 12.2 per cent this year, before a further contraction of 4.6 per cent in 2010.

However, prices should stabilise in 2011, with a slight upturn of 1.1 per cent.

Consecutive rises of 7.5 per cent, 8.4 per cent and 6.8 per cent in 2012, 2013 and 2014 respectively are forecast to follow, taking the average price of property up to £227,800 – more than £38,000 higher than the figure of £189.800, which is has been predicted for the end of this year.

Independent economists, Oxford Economics, which produced the figures for the federation, says house prices in England in 2013 will be three per cent below the level seen before the outset of the financial difficulties in 2007, but will be three per cent higher in 2014.

Furthermore, the study has found that the recession has increased the need for housing as demand continues to grow. Despite this, supply is falling with only 60 per cent of the new homes required being built each year.

Waiting lists are expected to grow significantly, with as many as five million people on them by 2010. In 2003, the number of people on waiting lists for homes numbered around 1.77 million; in 2008, that had grown by 40 per cent.

Chief executive of the federation, David Orr, said: "Our research shows that while house prices are falling in the short term, they will inevitably increase in the long term because of fundamental under-supply of housing.

For millions of people who want a home, getting a mortgage can be like winning the lottery. First time buyers and those wanting to buy shared ownership properties remain victims of a deep freeze in mortgage lending.

"Until lending is freed up, young and lower income households without access to large deposits will be locked out of the market."