CEBR expecting house prices to fall this year
Leading think tank, the Centre for Economics and Business Research (CEBR), has today suggested higher inflation and unemployment will knock the housing market recovery and lead to a fall in UK house prices.
It is forecasting a 1.7% fall for prices this year, reversing its earlier prediction of a rise of 0.8% for 2011.
While this would improve the affordability prospects for first-time buyers, demand for mortgage lending is expected to remain at low levels as homeowners opt to repay debts and rebuild savings amid the economic uncertainty.
Many experts have predicted that the housing market will remain subdued in 2011, due to uncertainty surrounding the economy and the ongoing mortgage rationing by lenders and many suggest small house price falls.
However, the CEBR said a pick up in consumer confidence will see a recovery in 2012 with house prices rising 2.3% and gaining 5.5% in 2015.
Douglas McWilliams, chief executive of the CEBR, comments: “We expect house prices to grow tentatively over the coming years, given that household incomes are being squeezed and banks are still wary of lending.”
“There is currently significant uncertainty in the market caused by the government’s spending cuts and a choppy recovery, which has greatly impacted transaction levels,” he added.