Date Published 11 May 2012
Although values will fall marginally this year, house prices will start to rise again next year and could increase by as much as 8% over the next three years.
The forecast has come from property consultancy CBRE, which also says that prime central London will continue to outperform the wider housing market, with values increasing by 6% this year and by 22% over the next three years.
Jennet Siebrits, head of residential research at CBRE, said: `Despite the market being characterised by monthly fluctuations, the longer-term outlook for the housing market is fairly static. We don't expect it to pick up until the economy fundamentally improves.
`Low interest rates are continuing to stave off repossessions and forced sales, but a substantial proportion of would-be buyers remain unable to move. Ultimately, bank lending still needs to loosen further to spur on housing market activity.`
The firm did raise its concerns over the new 15% Stamp Duty rate for ‘non-natural persons' buying property over £2m, but said it was less worried by the hike to 7% for individuals buying at this threshold.
Siebrits said: `Property prices in prime central London have increased by 30% over the last two years, so the additional expense incurred by the introduction of the new 7% rate has to be viewed within the context of the significant and ongoing price rises in high-value homes.
`However, the new regulation designed to prevent overseas buyers avoiding Stamp Duty Land Tax could have unintended consequences as it also captures UK domiciled companies.`