Average house prices to rise by 25 per cent by 2013
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28 July 2008
The document – researched by independent economists Oxford Economics – forecasts that house prices will fall in 2009, start to recover in 2010, and then rapidly increase from 2011.
The paper, entitled Home Truths 2008, says that house prices will increase by:
5.2 per cent in 2011
9.2 per cent in 2012, and
9.3 per cent in 2013 – with the typical price at the end of the period being well above the average in 2007 of £222,600.
In the short to mid term, it says house prices will:
Fall by 2.1 per cent in 2009, and
Increase by 1.3 per cent in 2010.
The report also states that while demand is growing, supply of new housing is falling, with only 75 per cent of the new homes required being built each year.
In addition, the document reveals that the least affordable place in 2007 was London, where a typical home was 14.2 times local salaries, compared to a national average of 11.2.
According to the report:
The credit crunch is preventing affordability from improving for first time buyers, even as some house prices fall
Nearly 1.7 million households, (more than four million people) are on waiting lists for a social home – an increase of
100,000 households since last year, and
At least 223,300 households are expected to form each year to 2026, and expected to add further to housing demand.
The report says that the average house price in the regions in 2013 will be:
North East - £163,600
North West - £195,600
Yorkshire and Humberside - £188,800
East Midlands - £206,500
West Midlands - £197,600
East - £294,600
London - £408,200
South East - £366,600, and
South West - £283,900.
Federation, which represents England’s housing associations, says its report shows that despite some calls to the contrary it is critical that the Government continues to invest in new social housing – as one in every thirteen households is now registered as being in need of an affordable home.
Federation Chief Executive David Orr said: “Our report shows that despite concerns about the current housing market downturn, house prices will increase substantially over the mid to long term.
“Demand for housing is going up, while the supply of new homes is going down. This means that as soon as the economic outlook improves house prices will resume their previous upward trajectory.
“People are living longer, they’re delaying getting married and they’re more likely to get divorced – meaning we now have more households than ever.
“One in thirteen households is registered as being in housing need, with four million people now living in cramped or difficult conditions.”
He added: “It’s clear that even with house prices falling, affordability hasn’t improved one iota. In recent months, we have seen mortgage arrears increase, the number of repossessions grow and new mortgages become more difficult to acquire.”
Mr Orr believes the effects of the credit crunch could hit the delivery of affordable housing and that the Government needs to work with housing associations in a flexible and innovative way in order to ensure current housing targets are met.
He said: “Ministers need to support housing associations in developing mortgage rescue schemes that prevent households from losing their homes. They should also support housing associations in buying up unsaleable private developer homes of a sufficient standard.”
Home Truths 2008 also shows that:
Last year, 167,577 new homes were completed, with the total number of completions expected to fall this year to 120,000
One in every four local areas has seen its housing waiting list at least double in the last five years
Lenders are rebuilding their balance sheets partly by increasing the cost of mortgages and demanding higher deposits, particularly from those households with least equity
Around 600,000 households, or 1.5 million people, are living in officially overcrowded homes
Last year, a further 73,360 households were officially accepted as being homeless, and
At the end of 2007, almost 80,000 households were living in temporary accommodation.
