House prices to recover by 2016, says think tank

'Rising trajectory' for house prices in the long term

12th April 2012

The future of the housing market has continued to appear uncertain since prices took a dip following their peak in 2007, yet think tank Cebr have predicted that values will regain their pre-recession levels by 2016 as a result of lower interest rates and the improving availability of mortgages.

As demand for properties for sale has fluctuated and observers wait to see the market's long-term reaction to the withdrawal of the stamp duty holiday, the organisation's forecast could help boost confidence among potential buyers and homeowners suffering from negative equity.

"Lending for housing was £74.5 billion in 2011 and we forecast that this will rise to £109.9 billion by 2016," said Shehan Mohamed, main author of this report.

If mortgages do become more accessible to people who are looking to either move house or buy a home for the first time, then it appears highly likely that purchasing activity would be stimulated as a result.

Indeed, the caution that lenders have been employing when granting mortgages in recent years is often highlighted as one of the reasons for the market's continual struggle to mount an effective, sustained recovery.

Should it become easier for prospective buyers to secure the finances they need to make a purchase, house prices may be expected to rise as demand intensifies.

Cebr has predicted that prices will rise in all areas of the UK between 2012 and 2013, with the only exception being Northern Ireland.

London and the South East are the two regions expected to experience the quickest rises, yet the chancellor's decision to introduce a seven per cent stamp duty level means the inflation gap with the rest of the country is forecast to narrow.

While Cebr's latest report is only a prediction, it could serve to spread a sense of optimism in a market that has had little cause for confidence in recent years.

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