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Housing market growth to remain 'settled', economist says

19 July 2006
Britain's housing and mortgage market is to remain settled over the next five years despite current fears, one economist has said.

Halifax's Martin Ellis claims that that it is unlikely that house prices will rise by half by 2012, despite others' expectations, but will remain in line with earnings.

"I think we are likely to see a far more settled housing market in the next five years," said Mr Ellis.

"We would expect house prices to rise in line with average earnings, which would be around four to five percent per year, plus a little bit on top of that for supply shortages and failure of house building to keep up with the rate of new households being formed."

His comments come in response to a new report by Oxford Economic Forecast which predicts the average house price to top £300,000 by 2012, forcing up the price of a mortgage.

There are also concerns that the new Home Information Packs will affect the market when they are introduced later this year.

However, Mr Ellis brushed aside such worries for future mortgage holders, saying that house prices will link better to earnings, stay settled and may even slightly cool in the short term.

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