House prices 'will rise sharply'

House prices will rise sharply from the second half of 1996, according to a report published today by investment bank Schroders. The stimulus will come from faster growth in incomes and tax cuts, with even a modest reduc tion of pounds 4bn - equivalent to 2p off the basic rate of income tax - enough to revive house prices.

There will also be one-off special factors, the most important being the pounds 10bn windfall to consumers from the flotation of the merged Halifax and Leeds Building Societies in 1997. Even if retail price inflation remains low, the Schroders economists reckon house prices could be increasing at a double digit rate by 1997.