House prices may climb by 25%

Homeowners worried about facing debt management problems due to negative equity may be interested in new research indicating house prices may increase 25 per cent by 2013.

According to the National Housing Federation’s (NHF) Home Truths 2008 report the property market will regain its health in the next 18 months and average prices will begin to rise again.

First-time buyers may be negatively affected if the estimates are true, however, as mortgages will be more expensive.

The rise is due to a greater demand for new homes caused by higher numbers of people getting divorced, marrying later in life and living longer, said David Orr, chief executive of the NHF.

Quoted on First Rung, Mr Orr said the government must work with housing associations to create affordable housing.

“It’s clear that even with house prices falling, affordability hasn’t improved one iota. In recent months, we have seen mortgage arrears increase, the number of repossessions grow and new mortgages become more difficult to acquire,” he said.

The report found the highest prices in 2013 will be in London, where the average will hit £408,200.

By Morwenna Kearns

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