Insurance News Archive

House prices set for 15% rise by end of year

UK house prices could see a rise of around 15 per cent before the end of 2007, according to new research.

Despite recent interest rate rises and the likelihood of more in future months, Lombard Street Research has suggested that record levels of mortgage lending and low housing stock are contributing to the continuation of the boom period.

"House prices are not overvalued if you look at affordability with interest rates at just five per cent," said Diana Choyleva a Lombard Street forecaster.

"Market momentum will be sustained in the near term and a weaker global economy should stop the Bank of England raising rates more than a quarter of a percentage point in the spring.

"We are, therefore, forecasting house price rises of between ten per cent and 15 per cent in 2007," she added.

But the industry researcher, which correctly predicted last year's ten per cent growth in house prices, added that if growth continues in double-digits there could be an unsustainable bubble created in the market for 2008.

23 Apr 2007