Fears of property price inflation in the future

Grovelawn Financial News 04/08/2008

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Property prices could escalate rapidly

The Centre for Economic and Business Research has predicted that, as long as the mortgage markets returns to normal by the end of 2009, under supply of properties could result in highly inflated prices by 2010.

House builders have suffered a 30 per cent slow down in house building since the credit crunch, with many delaying or cancelling building projects entirely. The report also said it was likely that due to the impact on housing, completions could be down by a further 20 per cent this year. This would increase the chance of a recovery in prices over the long term as under supply of homes will push prices higher.

The report warns that things will probably get worse before there is any real upturn in the property market with a further fall of 8 per cent for the rest of 2008. Home repossessions are likely to increase.

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