Assetz rules out 'double dip' in house prices

The housing market will continue to strengthen over the next few years rendering a dreaded 'double dip' in prices unlikely, investment specialists Assetz says.

The firm says commonly-held ideas over the causes of house price falls are misplaced.

It says future interest rate rises will not trigger a rise in forced sales because the bank base rate will remain low for the foreseeable future.

While many in the market have predicted there will be more distressed sales due to rising unemployment, Assetz believes the private sector is reaching the end of its job reduction phase.

A sudden rush of stock availability which could push down prices will also not happen because sellers will only gradually return to the market.

New home building is set to remain subdued for the foreseeable future, which will further reduce the prospect of the market being flooded with property, according to the firm.

Stuart Law, chief executive of Assetz, also says lenders will be under severe pressure to reduce margins and bring in more competitive deals once the main house price indices start showing positive annual growth.

"As soon as lenders are confident that the housing market is making a sustained recovery and the risks are diminishing, they will move to offer more attractive products to borrowers.

"I expect this to happen within three months of the major house price indices moving into positive growth, which means improving lending terms in the first quarter of next year," he adds.