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House prices: more of the same for 2012?

Wednesday, 23 November 2011 12:29 PM

Average house prices across the UK will rise by three per cent in 2012 with the market split again between London and the South East, according to financial services company Assetz.

The firm says the mortgage market will remain limited because of the Eurozone crisis and housing supply will remain at a historic low. But rents will continue to rise with an increase of five per cent.

On house prices, Assetz expects a strong performance in London and commuter hotspots in the South East. However, many parts of the country will see no growth or even marginal price falls, with unemployment being the key factor. Areas reliant on the manufacturing and public sectors will be worse hit.

It has downgraded its previous forecast of five per cent price growth in 2011 to just two per cent.

Stuart Law, chief executive of Assetz, said: "The quantitative easing programme announced in October will introduce further liquidity to the markets as we head into next year and support real asset prices over the short to medium term.

However, it is too soon to see the effect of the Eurozone crisis which will continue to impact the markets, limit the amount UK banks are able to lend and, perhaps most importantly, stifle consumer confidence."

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