The Government's National Planning Policy Framework (NPPF) is identified as a "key new micro issue" that will gradually boost the supply of housing and constrain the gentle rise in house prices, according to the UK house price forecast by CEBR.
In its house price forecast, CEBR researches a number of "micro and macro factors" which it identifies as having the largest impact on housing. "The key micro factor is the shortage of housing relative to potential household formation," said CEBR.
In CEBR's research, the 'micro factors' are the individual parts of the economy that it predicts will affect house prices and the 'macro factors' are elements of the economy as a whole that it predicts will affect house prices.
House prices will rise by 0.8% in 2012, due to low interest rates and increasing availability of mortgages "which will help the housing market edge upwards", CEBR said. House prices are expected to "edge up" over the 2012 to 2016 period, reaching pre-recession levels in mid 2016, "a view that has remained fairly consistent for three years", it added.
The key macro factors that are predicted to have an affect on the UK's house prices are affordability, employment and mortgage availability, according to CEBR. The first of these will be slightly positive, the second slightly negative and the third increasingly positive.
“House prices have been pretty stable over the past two years. Lending for housing was £74.5 billion in 2011 and we forecast that this will rise to £109.9 billion by 2016,” said Shehan Mohamed of CEBR. "House prices are likely to continue to rise more quickly in the London and the South East, though the gap in house price inflation with the rest of the country is likely to close," she added.
