House prices could rise by 20 per cent from 2012 to 2014 as a shortage of properties being built puts pressure on the market, according to forecasts published today.
The National Housing Federation (NHF) said that prices will fall by 12.2 per cent in total this year and 4.6 per cent next year before stabilising in 2011, with a 1.1 per cent rise.
It then expects a three-year boom, with a 7.5 per cent rise in 2012, 8.4 per cent in 2013 and 6.8 per cent in 2014, with the average price rising by £38,000, from £189,900 to £227,800 at the end of the period.
However, the Federation added that even these rises will not be enough to pull homeowners who bought with high loan-to-value mortgages at the peak of the market in 2007 out of negative equity. Prices have already fallen by about 25 per cent from peak to trough.
The prediction of another sharp upturn in the market comes amid fears that not enough new homes are being built to meet growing demand for property.
Only 60 per cent of the amount of homes required are currently completed each year, according to the research conducted for the NHF by Oxford Economics, the independent economists.
The NHF predicts that five million people could be on the social housing waiting list by next year. The number on the waiting list grew by 40 per cent to 1.77 million between 2003 and 2008.
It said that a lack of lending by banks is preventing first-time buyers and other low-income households from taking advantage from steep falls in house prices to get on the ladder.
David Orr, chief executive of the NHF, said: “Our new research shows that while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under-supply of housing. If we are to avoid run-away house prices in the future when the economy picks up, ministers must ensure we build the right numbers of homes for social rent now, so that housing supply meets demand.” (Rebecca O’Connor, The Times) http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6737078.ece
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