'Turbulent times' predicted for North East house prices » Housing » 24dash.com

The North East has had the fastest increase in house prices in the past five years according to a new report from the National Housing Federation.

However the document - researched by independent economists Oxford Economics - forecasts a fall in house prices through to 2011. Prices will then rise rapidly creating further supply and demand problems.

The report, North East Home Truths 2008, shows that despite the ups and downs of the housing market the need for more social housing is greater than ever.

Looking Back

• House prices have risen 87% in the past five years, faster than any other English region.
• Since 1997 house prices have gone up 161% while average incomes have risen just 35%.
• Housing waiting lists grew 46% in the past five years and currently one in 12 North East households are on a housing waiting lists (more than the national average).
• Nearly 4,800 households were accepted as homeless in 2007.

Looking Ahead

• Prices will fall in the region through to 2011 (falling 5.1% in 2009 and 1.3% in 2010)
• Prices will then rise rapidly, growing 8.6% in 2012 and 9.6% on 2013
• The average house price in the region in 2013 will be £163,600, a 15% rise from 2007.
• The North East is projected to have the highest percentage growth in households aged 65 and over by 2026.

In 2007 house prices across the North East were over eight times local incomes. The market varies considerably throughout the region - for example prices in Castle Morpeth are more than double prices in Hartlepool.

In Berwick house prices cost 13 times incomes yet no new social homes have been funded there for 2008/09.  Berwick is the fifth and Alnwick is the 20th top place in the country for second and holiday home ownership.

The Federation, which represents the regions housing associations, says the report shows that despite some calls to the contrary it is critical that the Government continues to invest in new social housing

Monica Burns, NHF North East regional manager said: "The recent drop in house price offers no comfort. It hurts homeowners paying more for a home than it is worth and does nothing for those trying to get a foot on the property ladder!" 

"North East Home Truths 2008 shows that despite concerns about the credit crunch, house prices across the North East have risen faster than anywhere else in the past five years and will increase further over the next five years.

"One in twelve households in the region is registered as being in housing need. Repossessions are growing and new mortgages are harder to get. The supply and demand mismatch will continue unless more social housing is provided."

The Federation believes the effects of the credit crunch could hit the delivery of affordable housing and that the Government needs to work with housing associations in a flexible and innovative way in order to ensure current housing targets are met. Therefore the Government should:

• Support housing associations to develop mortgage rescue schemes that prevent people losing their home.
• Support housing associations in buying unsaleable private developer homes of an appropriate standard.
• Increase grant funding to build more social home in rural parts of the region.