CEBR predicts £1k monthly house price growth

31 January 2007
Average house prices will continue to rise by over £1,000 a month in 2007, according to the Centre for Economics and Business Research (CEBR) think-tank.

The CEBR predicts that annual house price inflation will shrug off the effects of three successive base rate increases to rise to 7.6 per cent over the year.

This would put the value of the average house eight per cent higher, taking it from £179,500 to £193,000.

"Rate rises will have no immediate impact on prices as other factors, such as the continued strength of the financial services sector, remain more important," commented CEBR economist Jaspreet Sehmi.

Report co-author John Ward noted that although interest rate rises could act as a "dampener", "acute" supply shortages in many parts of the country would continue to drive prices upwards.

The think-tank also takes a longer view than many analysts by looking ahead to price growth trends in 2008 and 2009, which it forecast would slow to just 1.5 per cent next year and 3.9 per cent the year after.

But in 2010, CEBR forecasts, house price inflation will accelerate again to hit 7.1 per cent as the Olympics power an upturn in the economic cycle.

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