House prices set for 3% surge – led by the North

ECONOMISTS are bumping up their house price forecasts with the average home now expected to rise by 3 per cent in value over the next year.

The landslide victory for the Tories in the General Election has delivered a shot in the arm for the housing market.

Experts say the momentum is likely to continue building up over the next 12 months. Some regions are expected to see price growth of up to 4 per cent this year with the Midlands and the North tipped to lead the way, but the London market is likely to remain subdued.

Official figures due for release on Wednesday for house prices in December are predicted to show the first stirrings of the market revival.

In the year to November, prior to the Election, prices were starting to show improvement with a rise of 2.2 per cent compared to 1.3 per cent in the year to October.

The EY Item Club, which uses the Treasury’s own economic computer model, has now raised its forecast for house price growth from 2 per cent to 3 per cent.

Howard Archer, Item’s chief economist, said: ‘There is pretty compelling evidence that there has been a pick-up.’

Lawrence Bowles, research analyst at property group Savills, said: ‘Sentiment has taken a real swing into positive territory.’