UK property market looks set for modest rebound UPDATE
Tuesday, December 6, 2005 1:51:13 PM
afxpress.com
(Updating to add view of property website Hometrack)
LONDON (AFX) - The UK property market looks set for a modest rebound in 2005 and over the next two years, the Council of Mortgage Lenders predicted
The CML is now forecasting that house prices will rise by an annual rate of 4 pct this year, a substantial upgrade from the no change estimate made previously. Through 2006 and 2007, prices are seen rising by 2 pct respectively -- also upward revisions from the no change prediction made previously
A lot of the buoyancy in the market will be the result of mortgaging activity, it said
"Even though the number of property sales is expected to decline from 1.23 mln in 2004 to 970,000 this year and 920,000 in 2006 and 2007, the high level of remortgaging will ensure that gross lending remains buoyant," CML said. Despite the upward revision, however, CML emphasised that it is not expecting a new surge in house prices or market activity. "Given continuing affordability pressures, a flat outlook for interest rates and an economy that is likely to be stuck in neutral for much of the next two years, the outlook is for modest house price growth only," it pronounced
Equally, the CML does not see any dramatic worsening in mortgage repossessions or defaults
"While repossessions may continue to pick up modestly over the next few years, they will remain substantially below the long-term trend," said CML chairman Stuart Bernau
The CML makes up about 98 pct of all mortgage lending in the UK
For its part, property website Hometrack predicted that house prices will rise by a shade over 1 pct in 2006 and by roughly 2.1 pct over the next three years alongside falling numbers of transactions
These rises will be the lowest for a decade, it said
"Affordability constraints remain the biggest barrier to house price growth over 2006. We expect the annual rate of house price growth to remain in low single digits over the next few years, supported by fewer sales and a continuing shortfall in new housing supply," Hometrack director of research Richard Donnell said |
