UK house prices are expected to jump 16% over the next four years to take prices above 2007’s high, experts have predicted.
According to the Centre for Economics and Business Research (CEBR), the current slide in property prices is close to bottoming out.
It calculated that although the average UK house price will be another 1.4% lower by the end of the year, this will be the turning point.
The CEBR found that the average cost of a property today is £175,000, but it’s expected to rise to £205,643 by 2015.
The 4% year-on-year surge is predicted to start at the end of 2011 and carry on until 2015. It would see the average UK house price rise to above the 2007 high of £191,340.
Despite the economy remaining fragile, the CEBR said a lack of new homes under construction will trigger the forecasted 4% annual rise in house prices between 2012 and 2015.
Douglas McWilliams, chief executive of CEBR, said: “We still believe house prices will fall this year, although there are signs prices will stabilise over the second half of the year.
“We think the market is currently close to the bottom for the UK.
“The main factor in driving house prices up is the shortage of available housing – which has already pushed up rent. Housing completions fell to only 130,000 in 2010, well below the level required to keep pace with demographic change.”
Banks are also expected to loosen their strict lending criteria, encouraging more people to look for a new home.