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London, 11th February 2009 – Jones Lang LaSalle announced today that it has revised its position on the UK housing market over the short term, predicting that house prices will remain broadly flat this year, with the potential for price falls of up to -3%. Following Jones Lang LaSalle's last quarterly forecast in November 2009, this revision reflects the improved UK economic outlook during Q4 2009 which saw the economy officially but tentatively emerge from recession.
The recent increase in UK house prices has been based on weak and temporary foundations. With the upcoming General Election and the end of temporary fillips, such as the lower rate of VAT and Quantitative Easing, the demand for housing will remain fragile. Whilst inflationary pressures exist, the economic recovery remains subdued and the supply of mortgage finance continues to be a constraint to home purchasers.
Though prices will remain relatively stagnant in 2011, the market will be prepared for stronger economic and housing market conditions during 2012 when we expect a strong upswing and a return to pre-credit crisis conditions of strong price growth and greater activity. By 2013 annual house price inflation could accelerate towards 10% per annum.
James Thomas, Head of Residential Development and Investment at Jones Lang LaSalle, said: “The short-term outlook for house prices is relatively uncertain at present, principally because prices have recovered earlier and stronger than expected given the economic and financial backdrop. Whilst risks remain that house prices will fall by more than 5% during 2010, we believe that the outlook has improved since our last quarterly forecast. Prices are likely to remain broadly flat this year with monthly price changes shifting between small rises and minor falls. On balance there will probably be fewer months of positive growth leading to a small annual decline in prices for 2010 as a whole.”
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