Will UK house prices rise by 40% over the next 5 years?

10/08/2007 by Damian.

     Many of you will have seen today that the National Housing Federation (NHF) expects house prices to rise 40% by 2012, with the average House price then breaching £300,000. With compounding, this means an average increase of roughly 8% per year. This is in line with the long-term average, which Halifax says is 8% since 1983.

Is the Market Going Up or will it Crash!’

All predictions should be taken on face value and you should always take head of who has commissioned and written the article.  The NHF has a vested interest and this could be why we have an upbeat report.

Most experts seem to think price rises will slow with the Council of Mortgage Lenders (CML) estimating that house prices will go up by just 7% in 2007 and only 2-3% in 2008.
Halifax recently revised up its prediction for this year from 4% to 6%. However, this is still lower than the average needed to hit NHF’s prediction.

Is the Market Going to Crash!

The truth is no-one knows take for example Hometrack.    Hometrack made no predictions this year after guessing a 1% rise for 2006. It was more like 10%.

As for the NHF’s prediction of a 40% increase over the next 5 years.  Take into consideration the track record of all other forecasters being so poor, it seems unlikely that its own prediction will come true either.

Like we reported in our earlier blog Beginners Guide to Predicting the Outlook for the Housing Market, predict the housing market at your peril!

Related Links

Beginners Guide to Predicting the Outlook for the Housing Market

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