House prices will continue to rise for the foreseeable future according to independent research from CEBR commissioned by Chesterton Humberts, one of the UK's leading property consultancies.
The research says that whilst mortgage lending remains tight, conditions have improved substantially since the worst of the crisis and lending continues to edge up. Base rates are forecast to remain at historic lows in 2010, making mortgages relatively cheap, albeit with post-credit crunch loan-to-value rates and higher risk premia.
Economic output has weakened considerably over the last year. We now expect modest growth of 1.2% in 2010. Finally, the supply side of the market will remain tight into the medium term. The current shortage of property on the market may be causing short term supply issues, but in medium term, the current shortage of new house-building will also come into play
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Robert Bartlett, Chesterton Humberts CEO, comments: “The CEBR's research supports our belief that the property market will experience a fractured but sustainable recovery, with the London market continuing to increase more rapidly than other areas. The monthly Chesterton Humberts/CEBR House Price Poll of Poll is also demonstrating that the price of the top 20% of properties by value is continuing to increase more rapidly than lower value properties.
“While rising unemployment and weak wage growth will certainly temper house price growth next year, growth will continue, especially in London where Sterling's weakness against the Euro continues to make UK property an attractive investment for cash rich foreign investors. For those living in areas of relatively stable employment, many now have considerably greater disposable income than just a year ago, and are now taking advantage of the historically low mortgage rates to secure their housing needs.
“Looking beyond the end of 2010, we have an Olympic Games in Britain in 2012, another factor which is likely to keep demand for property strong in the two years leading up to that event.”
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