RECOVERY in the Scottish housing market has been held back by at least
six months. Tax increases and uncertainty over interest rates mean that
homeowners will now have to wait until the middle of next year before
the value of their homes reaches the levels they had hoped to see later
this year, according to the latest house price forecast by mortgage
lender Household Mortgage Corporation.
The lender has compared its latest figures with the forecast it
published last December. It says that the clear weakening in consumer
confidence since April this year has put brakes on the recovery.
HMC's house price model predicts that the average home in Scotland
will be worth #51,000 by mid-1995, a price it had been expected to reach
at the end of 1994. By December 1995, the average price should be around
#52,500, an increase of around 4.7% over the previous year.
By comparison in London and the South East, the areas worst hit by the
recession, house prices are expected to show a steady growth of almost
6% by the end of 1995. But the average house in 1995 will still be worth
around #6000 less than five years earlier, emphasising that it will be
some time before people can free themselves of the negative equity trap.
HMC's marketing director, Brian Whitfield, said: ''At the end of last
year the indicators were that house prices would rise quite rapidly over
the next 18 months, but confidence has been badly dented by April's tax
increases and the lack of clear signs of recovery elsewhere in the
economy.''
He went on to say that homebuyers have been unnerved by uncertainty
caused by ''endless talk'' from the Chancellor and the Governor of the
Bank of England of rising interest rates.
''Faced with this, the forecasters whose predictions feed into our
computer model are naturally much more cautious about the pace of the
recovery. Their caution has led us to cut our house price predictions.
''A full recovery needs a full return of consumer confidence. The
Government might do well to step back for a while and let this happen.''
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