House prices are not set to reach their pre-recession levels for another four years, according to research from the Centre for Economics and Business Research published today.
The think-tank expects prices will continue to edge up slowly – by 0.8 per cent this year – as the mortgage famine affecting people's ability to buy gradually eases. "Lending for housing was £74.5bn in 2011 and we forecast this will rise to £109.9bn by 2016," says Shehan Mohamed, the report's author.
But the changes to the planning regulations announced in the Budget last month are expected to boost the supply of housing, constraining the "gentle rise in house prices", the CEBR adds.
Regionally, the CEBR predicts prices will fall in the North-east and North-west this year before bouncing higher in these areas in 2013. The only region expected to see a fall in the property market next year is Northern Ireland, where the think-tank expects prices will drop by 9.5 per cent. Even though house price rises in London and the South-east will continue to outpace the rest of the country – rising up to 3.6 per cent next year – the CEBR expects this regional gap will shrink in terms of house- price inflation because of the new 7 per cent stamp duty rate on £2m houses and the heavy taxation on corporate home ownership announced in the Budget.
London is also likely to see an easing in the influx of money looking for a "safe haven" following events such as the Arab Spring and the euro crisis.
Halifax's latest report said house prices jumped 2.2 per cent in March, with the average property costing £163,803. But experts said the rise was a blip caused by a rush of first-time buyers trying to beat the deadline of stamp duty changes. In contrast, Nationwide's house price index revealed a 1 per cent fall in prices in March.
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