House prices ‘to increase by mid-2009’

A leading economics research consultancy has predicted that house prices may be set to rise by the middle of 2009.

The Centre for Economics and Business Research said that following a consistent drop in house prices between late 2007 and mid-2009, a housing supply shortage would mean that prices would begin to recover.

The group predicts that prices in 2012 will be around 15% higher than at the previous peak at the end of 2007.

A spokesperson for Think Money said: "This news will receive mixed reactions, because there are two sets of people hoping for different things.

"On the one hand, first-time buyers are pleased that house prices are falling, because that means smaller mortgages. Those people may want to consider buying a home before mid-2009 when prices are expected to pick up again.

"On the other hand, many existing homeowners are worried about falling house prices, as there is the risk that selling their homes may not raise enough funds to cover the mortgage anymore. There will be some relief amongst homeowners when prices do begin to rise."

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