House prices set to rise gradually
By Jonathan Cable
LONDON (Reuters) - House prices have probably bottomed but will only creep higher over the next couple of years as more properties come on the market and the economy makes a plodding return to growth, a Reuters poll showed.
Average house prices are seen ending this year 3.4 percent higher than where they started, but will rise just 1.8 percent next year and 2.2 percent in 2011, the poll of over 30 analysts found -- a far cry from double-digit growth during boom times.
The results in the poll conducted Nov 23-26 are generally more optimistic than predicted in the last Reuters UK housing market poll in September but comes after prices sank 16 percent in 2008.
Halifax said earlier this month house prices rose 1.2 percent in October, leaving the annual rate of decline at its smallest in 1-1/2 years as a lack of supply for sale and a burst of demand buoyed prices.
As house prices plummeted sellers deserted the market, sitting in their properties waiting for prices to rebound, and property website Rightmove said last week the number of new sellers remained thin, 30 percent below volumes seen in 2007.
"What recent dynamics have shown is that a shortage of supply set against rising demand tends to support prices and vice versa. We are a small island nation, with limited supply of homes," said Alan Clarke at BNP Paribas.
Average home prices tripled in the ten years to the peak struck in 2007. But they crashed as a global financial crisis set in and mortgage lending evaporated, with medians showing prices will have fallen 18 percent from peak to trough.
Eighteen of 32 analysts said house prices had already stabilised, with six saying they would within a year. Eight said it would be a year or more before prices bottomed out. Continued...
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