House prices 'to rise 20% by 2014'

clock • 1 min read

House prices are predicted to rise 20% by 2014 due to a lack of supply and increased demand, according to the latest forecast from the National Housing Federation (NHF).

The forecast says prices will increase in the long term because of a fundamental under-supply of housing as only around 60% of the new homes required are being built each year.

NHF also says more than 250,000 households are expected to form each year until 2026 which will add to housing demand.

With these figures in mind, it predicts a slow recovery for the housing market with prices falling by 12.2% this year and a further 4.6% in 2010 before a stabilisation occurs in 2011 with a 1.1% rise.

It then expects a three-year boom with annual growth of 7.5% in 2012, 8.4% in 2013 and 6.8% in 2014.

The average price of a UK home will rise by £38,000 to £227,800 in 2014 compared to £189,800 in 2009.

The figures mean people who bought at the peak of the market in 2007 will have to wait until 2014 to emerge from negative equity. By 2014, house prices will be 3% higher than their pre-credit crunch peak of 2007.

The report also states affordability is not improving for many low-to-middle income households and for first time buyers due to the failure of the nationalised banks to lend.

David Orr, chief executive of the NHF, says: "We welcome the Government's recent promise of a national affordable house building drive. They must also make sure that housing associations, who build the majority of affordable homes, get the right level of funding and income to enable them to deliver the number of homes we so desperately need.

"If we are to avoid run-away house prices in the future when the economy picks up, ministers must ensure we build the right numbers of homes for social rent now, so that housing supply meets demand."

 

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