Home » House Prices » House prices expected to rise 5% this year

House prices expected to rise 5% this year

The Assetz House Price Watch is an overview of the data supplied by the five main house prices indices: Acadametrics HPI, Rightmove, Nationwide, Halifax and the CLG.

It reveals that all the annualised average rates of growth continue to point to increasing market stability with the three month average rate of growth, which reflects UK house prices in the first quarter of 2011, now showing 2.98%.

This suggests that falls in the monthly growth rate at the end of 2010 have bottomed out.

Stuart Law, Chief Executive of Assetz, said: "UK house prices have shown resilience in the face of the Government’s spending cuts, recouping losses witnessed at the end of 2010 in the first few months of this year.

"We expect prices to continue to increase in the second quarter in line with a number of new mortgage funding schemes and good news stories regarding the economy.

"The launch of FirstBuy Direct, a new Government scheme which will allocate a share of £250million to at least 10,000 first time buyers, will work in tandem with a number of other shared equity schemes currently available, to increase demand at the bottom of the market.

"The decision to make investors pay Stamp Duty on the average value of properties purchased rather than their total value, will also encourage professional landlords and larger institutional investors into the market.

"These buyers have played an increasingly important role in supporting house prices over the last few years.

"Recent falls in the rate of inflation and unemployment have helped boost consumer confidence, and sellers remain bullish when it comes to pricing a property for sale. These factors, combined with limited supply of property and improving mortgage availability, will continue to deliver an upwards curve in house price growth this year.

"Although falling inflation has eased pressure on the Bank of England to raise interest rates, we still anticipate a rate rise of 0.25% in the next few months, which would indicate that the Bank has confidence in the economy.

"The slight increase in mortgage repayments as a result will have a negligible impact on homeowners and prospective buyers who will continue to benefit from historic low rates. Interest rates are unlikely to exceed 1% this year in order to compensate for recent tax increases and spending cuts.

"These low rates will continue to support house prices and consequently, unlike many commentators, we still expect values to increase by around 5% this year."

Have your say on this story using the comment section below