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Property price rises forecast to beat inflation

Building society bosses are predicting house price growth will continue to outstrip inflation, confounding forecasts from economists.

A BSA survey reveals that the majority of society chief executives believe house price rises will run at 4-5 per cent this year.

This is in marked contrast to price predictions published by the BSA in January, which showed that most experts in the wider mortgage industry were predicting an annual increase of just over 2 per cent.

The vast majority of society chief executives think the housing market will remain buoyant this year, with 89 per cent saying they expect to do either the same or more lending compared with only 48 per cent last year.

Forty per cent predict interest rates will remain at 4.5 per cent at the end of the year while another 30 per cent of bosses forecast a 25-basis point rise to 4.75 per centBSA director general Adrian Coles says: “An active housing market is good news for first-time buyers and more sophisticated affordability criteria are helping people on to the property ladder. Once on, existing homeowners will benefit from above inflation returns. However, it is also clear that chief executives believe that the one thing the Chancellor could do to help even more people into homeownership is to reform stamp duty.”

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