House prices could rise by 3 per cent this year

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The Independent Online
HOUSE prices should rise by 3 per cent on average this year on the back of modest economic recovery and a 10 per cent increase in home- buying according to a Lloyds Bank economist.

Writing in the latest Lloyds Bank Economic Bulletin, Patrick Moon says regional differences in house price trends could be substantial in 1993, but the biggest scope for recovery is in London, the South-east and the South-west.

Evidence for a pick-up in the housing market comes from a new survey of estate agents owned by banks, building societies and insurance companies which shows that completed house deals in February were up by more than 11 per cent on the same month last year.

New instructions, although still below the same period in 1992, bounced back sharply in the first two months of the year and gross sales - where finance is arranged, solicitors instructed, and there is no chain - rose by 15 per cent compared with January.

Along with the upswing in the rate of new mortgage commitments by building societies in February, Mr Moon argues that these early indicators suggest that the number of housing transactions could rise to almost 1.3 million this year from 1.1 million in 1992.

Modest economic growth of 1 per cent in 1993 would be consistent with growth in nominal incomes of 5 per cent and this could be enough, the Lloyds Bank article contends, to accommodate a rise in house prices nationally of around 3 per cent.