House prices 'to outstrip inflation'

Posted: 19 May 2006 08:46:13 GMT

The majority of chief executives from the UK's building societies believe that house price inflation will run at between four and five per cent by the and of the year.

It is a measure of the recent revival in the property market that this is the case, with the majority of experts in the mortgage industry predicting an annual increase of only two per cent back in January.

A survey from the Building Societies Association found that 89 per cent of CEOs were expecting to do more lending or about the same in 2006, which compares to just 48 per cent of those questioned last year.

One of the biggest factors to consider this year will be the Bank of England's interest rate decision and 40 per cent of the CEOs suggested that it would remain at 4.5 per cent.

Around 30 per cent, however, said that there would be a small rise to 4.75 per cent, which could dampen the market slightly and lead to a slowdown in house price growth.

The key area of consensus was on the best way to help first-time buyers, with the vast majority saying that stamp duty needed to be reformed.


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