Optimism surrounding the housing market continues to gain momentum, with the Centre for Economics and Business Research (CEBR) predicting that
property prices will rise in 2010.
The organisation believes the market will bottom out later this year at around 28% below the 2007 peak, before rising 3.1% next year and 2.5% in 2011.
Growth will then become more robust, rising a total of 23% by end 2013, it claims.
Growing optimism throughout the industry
When the
property market was in free-fall, the CEBR claimed prices would have to fall 40% from their peak before any recovery was possible.
The fact it has revised this figure down to 28% indicates a growing confidence in the property market, and it is by no means alone.
Recent reports from Halifax, Nationwide and the Land Registry have all shown a slowing in house price falls in recent months.
Difficult times ahead
CEBR managing economist Ben Read says that, although these figures are encouraging, homeowners must still brace themselves for some difficulty in the months ahead.
“Going forward, house prices are likely to remain in the doldrums for some time, as what is likely to be a slow recovery in the real economy translates into weak wage growth and stubbornly high unemployment – factors that will put a fairly heavy lid on house price inflation,” says Read.
"We may start to see stronger house price growth towards 2012 or 2013 as the huge downturn in new housebuilding over the past 12 to 18 months leads to significant under-supply over the medium term."
Mortgage market still tricky
With house prices expected to bottom out soon, many buyers will see this as a good time to enter the market.
If you are among this group, it's essential you remember that, while house prices may look similar to 2004, the
mortgage market is a completely different animal today.
Whereas lenders were offering low rate mortgages to any customer who walked through the door back then, nowadays you will need a deposit of at least 10% to even be considered.
And if you want a
competitive rate, chances are you'll need to produce a deposit of 25% to 40%, so keep this in mind when you are doing your affordability calculations.
