House prices in England will fall 12.2% in 2009 and 4.6% in 2010 before stablising in 2011, according to the National Housing Federation’s (NHF) latest forecasts. The figures for the survey were produced by independent economists Oxford Economics.
The NHF, which represents housing associations, predict that there will be a 1.1% rise in prices in 2011, and then rises of 7.5%, 8.4% and 6.8% in 2012, 2013 and 2014 respectively. House prices by 2014 will be 20% higher than current values, or about £38,000 more than the forecast average price for 2009 of £189,800.
This would mean that homeowners who bought at the height of the property boom in 2007 could be in negative equity until 2014.
The predictions are in contrast to claims by the Nationwide Building Society, which suggested recently that there was a ‘reasonable chance’ that house prices would rise by the end of 2009.
David Orr, chief executive of the NHF, said: ‘While house prices are falling in the short term, they will inevitably increase in the long term, because of a fundamental undersupply of housing.’
The NHF believe that only 60% of new homes required to be built each year were actually being constructed. In addition, more than 250,000 households are expected to form each year until 2026, adding to housing demand.
It also noted that many young and low-income buyers would be unable to purchase property until restrictions on lending by mortgage suppliers eased.
Mr Orr said: ‘We welcome the Government’s recent promise of a national affordable house building drive, but if we are to avoid runaway 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. ‘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.’
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