UBS predicts house prices will recover slowly next year

HOUSE prices are likely to remain broadly flat for the rest of the year and will rise by only 7 per cent next year, according to John Wriglesworth of UBS, the securities house, writes John Willcock.

'The market is bumping along the bottom and barring any ill-advised interference from the Government, should gradually recover towards the end of the year, and in 1994.'

The current volume of housing transactions is only slightly above the depths of 1992, he said. Volumes are set to rise by 5 per cent to 1.2 million in 1993, the lowest figure since 1976 apart from last year.

'We said at the beginning of the year that there would be more pain before gain, but with successive falls in interest rates we could have expected an improving housing market. If anything it has faltered, and this is due to a total lack of confidence on behalf of buyers and sellers,' Mr Wriglesworth said.

There were many factors damaging confidence, not least the Government's own problems. People were also worried about losing their jobs, being trapped by negative equity and what the Government might do to stamp duty in the next Budget.

He believed confidence would return if interest rates remained low and unemployment fell as forecast to under 2.9 million. This would trigger pent-up demand and transactions should rise by 10 per cent in 1994.