Recovery in house sales predicted

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The Independent Online
HOUSE prices are set for a surprise spurt early next year, according to a report published today. And offering a glimmer of hope to hundreds of thousands of people trying to sell their homes, the report predicts a 12 per cent recovery in the number of properties changing hands to 1.3 million in 1996, writes Patrick Hosking.

Ian Shepherdson, an economist with the banking group HSBC, forecasts a price rise of 2 per cent or more by the middle of next year. He says negative factors such as rising interest rates and tax bills badly hit the housing market this year, but these are fading.

Mortgage rates have been cut and expectations of personal tax cuts are growing.

"If our forecast of a pounds 4bn tax-cutting package is correct, then consumer confidence could well rebound strongly, lifting the housing market in its wake."

The forecast follows official figures last week tentatively suggesting signs of life in the market. Net mortgage commitments - the best indicator for future housing market activity - rose to a seven-month high in August.