House prices 25% ahead by 2013 as demand exceeds supply

The National Housing Federation (NHF) is predicting that UK residential property will make a strong comeback from 2010.

According to the body, which represent 1,300 not-for-profit housing associations in England, the current market downturn will be followed by five-years of property price inflation, during which the value of homes in England will rise 25%.

Working from research provided by Oxford Economics, NHF is predicting a 5.2% increase in residential property prices during 2011, followed by rises of over 9% a year in both 2012 and 2013.

This would bring the cost of the average home in England to £274,700 by 2013.

NHF argues that price rises are inevitable because the country’s housing stock is low and the supply of new homes is around 75% below requirements.

Last year, 167,577 new homes were completed and in 2008, the figure could to fall to 120,000.

However, prices are expected to fall further before the turnaround and NHF is predicting a 2.1% decline in 2009.

In related news, housing intelligence firm, Hometrack, has reported that house prices fell 1.2% in July, declining for the tenth consecutive month and taking the annual drop in the average price of a home in England and Wales to 4.4%.

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