Homeowners worried by gloomy news of the sliding property market will be heartened to hear that house prices could rise by as much as 30%. According to a new study from the Centre for Economics and Business Research (CEBR), the market could pick up by the middle of next year and by 2012 the average value will climb by more than £50,000 to a record £226,000.
The CEBR says the lack of new homes in England is a key factor that will fuel the house price recovery. Housebuilding has nearly halted, with builders saying there is no point erecting new homes during a mortgage drought and with confidence so low. Yet, demand for new housing continues from people such as divorcees and immigrants.
The CEBR’s cheery prediction is accompanied by equally optimistic news from other quarters. The National Housing Federation says it expects prices will continue to fall next year, but start to recover in 2010 and ‘rapidly increase’ in 2011.
In London, prices are holding, reports Haart estate agents, with the capital ‘over the worst.’ Values decreased by only 2% in June to £248,155 and the number of first time buyer enquiries are up for the third month in a row to 20.5%.
In addition, vendors achieved 95% of their asking prices in July, indicating that although a further small adjustment is needed in pricing, vendors are becoming more realistic.
Russell Jervis from Haarts concludes: ‘Vendors are beginning to accept that prices have dropped and only realistically priced properties will sell. It will remain a buyer’s market for the rest of the year. As a result, it is a great time to purchase a property and move up the chain.’