Property market optimism rises

The Council of Mortgage Lenders has upped its expectations for where the property market is headed in the next two years.

Previously it had predicted that house prices would be flat between 2005 and 2007, but today it revised its predictions.

As a response to a recovering property market in the second half of the year, the Council of Mortgage Lenders said house prices would rise four per cent this year, and by two per cent a year over the next two years.

But while rising, these rates of increase fall far short of the house price increase of 11.8 per cent in 2004, the 15.7 per cent increase in 2003, and the 17 per cent increase in 2002.

If house prices do grow by four per cent, it will be the slowest annual growth since 1996.

However, given that at the start of the year some commentators were predicting falls in 2005, a modest rise in house prices is definitely a positive shift.

At the start of the year Halifax, one of the country's largest mortgage lenders, predicted house prices would drop two per cent in 2005.

Deustche Bank predicted a 15 per cent fall.