House prices to rise by 25% Article Published: 17:07 31/07/2008 Article Classification: Kalamon Fund
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“House prices to rise by 25%”, says a report published recently by the National Housing Federation.

It predicts a rise of nearly a quarter over the next five years.  The report also confirms that, whilst demand is growing, the supply of new housing has fallen dramatically. The results show that the impact of the credit crunch will be completely absorbed by this increasing demand. People are now living longer and are more likely to get divorced, which means the number of households are increasing. Builders and developers, meanwhile, are cutting back and many planned new homes have been put on hold, waiting for the “storm” to pass. Only 75% of the new homes required are actually being built each year.

So, if demand is rising and supply is decreasing, this can only mean substantial increases in prices over the medium to long term, in spite of the current downturn. As soon as the economic outlook starts to improve, price hikes will resume and we will see a dramatic increase in the value of homes, according to the findings.

The report, researched by independent economists Oxford Economics, concludes that house prices will start to recover over the next eighteen months and will rapidly increase from 2011.