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Saturday, 29 June, 2002, 23:26 GMT 00:26 UK
Housing boom to last 'another year'
Demand outstrips supply graph

The UK's housing market will "boom for at least another year", a new housing survey predicts.


While house prices will continue to boom, we are predicting a slowdown next year, to an annual rise of 8%

John Wriglesworth
Hometrack economist

Hometrack said that it now expected "significant house price rises" over the next few months and had revised its forecast of house price growth to 20% for the year 2002.

It said that a continuing surplus of buyers in the market was creating excess demand for property, which would sustain the market and continue pushing up prices in future months.

Some commentators have speculated that the market could go off the boil.

While Hometrack is predicting slower growth in 2003, it believes house prices could rise by 8% next year, unless there is major interference in the market by the government or adverse economic factors.

Rising prices

The monthly survey of 4,000 estate agents revealed a further gap in supply and demand in June - and the continuing stranglehold sellers have on the market.

UK Hot spots*
Cornwall: 3.1%
Teesside: 3.0%
Derbyshire: 2.8%
East Sussex: 2.6%
Dorset: 2.6%
*Overall average price change

For example, the gap between the asking price and the price paid for properties narrowed again in June, for the sixth month in a row.

In other words, more sellers were getting the price they wanted buyers paying, on average, 97.7% of the asking price.

According to the survey it is taking only 2.7 weeks to sell a house, compared with more than five weeks just seven months ago.

Boom areas

House prices increased by an average of 2% in June. This was slightly down on May, which showed 2.6% growth, but higher than April's figure of 1.8%.

UK 'Cold' spots
South Yorkshire: 0.6%
Oxfordshire: 1.2%
Merseyside: 1.2%
Cambridgeshire: 1.3%
Greater Manchester: 1.3%
*Overall average price change

So far this year, house prices have risen by 9.8%, which is equivalent to an annual rate of 20%.

Hometrack has therefore revised its forecast from 5% at the beginning of the year to 20% for 2002.

John Wriglesworth, Hometrack's housing economist, said that house prices would continue to push ahead, barring any significant interest rate rise, government panic or interference with the market.

"[Prices] are set to continue to rise strongly for at least another year (albeit at a slower rate).", he said.

He said that a combination of positive factors in the market, such as the lowest mortgage rates for 50 years, continuing low unemployment, a rising population and an acute shortage of supply, would sustain the market.

"While house prices will continue to boom, we are predicting a slowdown next year, to an annual rise of 8%, but this is still over four times the current annual rate of retail price inflation," he said.

Price achieved as a % of asking price graph


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26 Jun 02 | Business
20 Jun 02 | Business
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