Home prices 'to rise 15% by 2016'

By STEVE HAWKES, Business Editor 

HOUSE prices will rise by 15 PER CENT in the next five years — despite fears of economic armageddon, a think-tank claimed last night.

Experts said Britain's chronic housing shortage would make up for any lack of demand.
The Centre for Economics and Business Research insisted that the fight for property being put up for sale would ratchet prices higher.
It's a huge boost for home owners — but risks pricing even more first-time buyers out of the market.
CEBR economist Charles Davis told Sun City: "There is a definite weakness on the demand side.
"But you can't get away from the fact that housebuilding is at its lowest levels since the 1920s at a time when the population is rising. The supply constraints will push up demand."
He has pencilled in a 1.6 per cent rise for 2012, followed by 2.2 per cent the next year and 2.6 per cent in 2014.
CEBR predicts a 3.2 per cent rise in 2015, followed by 4.2 per cent in 2016. The biggest increase next year is expected in London and the South East — at 1.9 per cent.
The predictions are a far cry from the boom years before the credit crisis.
Average prices — from one-bed flats to family mansions — rose by a staggering 190 PER CENT between 1997 and 2007.
The forecast came on the day when a Bank of England policymaker admitted the chances of the economy going backwards were now "50-50".
Ben Broadbent, one of the nine Monetary Policy Committee members, warned that Britain could fall into recession.
He said: "Clearly there's a risk of that."
HALIFAX — Britain's biggest mortgage lender — echoed the CEBR findings.
Martin Ellis, housing economist, said the property market would be "boring" but stable.
But stockbroker CAPITAL ECONOMICS insisted prices were still over-valued and a correction was "inevitable".
Paul Diggle told Sun City: "We believe prices next year will fall by five per cent and by another five per cent the year after.
"The UK economy as a whole is going to stagnate and a correction has to come at some point."
The French fancy M&S knickers
MORE than 1,000 shoppers queued for "sensible" knickers and sliced bread yesterday — as MARKS & SPENCER returned to Paris.
M&S opened a new 15,000 sq ft flagship store on the Champs-Elysees a decade after the firm retreated from Europe to save money.
Supermodel and actress Rosie Huntingdon-Whiteley, left, took to the red carpet in a chic Marks & Spencer dress to join chief executive Marc Bolland in welcoming the crowds.
He said: "What people want is choice, something very strong on price and very strong on quality. We offer real value for money, so really have the sweet spot here in France."
M&S's head of women's wear Kate Bostock was among the execs at the launch, despite rumours that she is keen to quit — this time for online rival ASOS. She said she was "disappointed" at reports claiming she is involved in discussions with the fashion retailer.
But sources claim she has also held talks with discount chain NEW LOOK in recent months.
Mr Bolland refused to comment. He insisted: "We have never commented. Kate is sitting right here with me."
A thousand people were queuing around the block by the time the store opened at 11.30am. One shopper, 18-year-old Sofie Klausen, said she was looking forward to trying "the scones and sliced bread".
Anne Froiderar, 28, said M&S was one of the only places locally she could buy ready-to-eat sandwiches and other food.
She added: "I also like the underwear — it was always very good quality, but not that sexy."
6 locos to battle the big freeze
NETWORK RAIL is preparing to tackle the big freeze this winter — with six souped-up locos.
Rail chiefs have transformed half a dozen old VIRGIN diesels and fitted them with hi-tech snow ploughs and de-icers.
They are primed and ready to operate in the South East from next week. Network Rail has given them the unfortunate working name of "SITT" — Snow and Ice-Treatment Train.
Finance chief Patrick Butcher admitted passengers may alter the name slightly if they have problems next month.
But he insisted: "We have done all we can to put ourselves in the best possible position this winter.
"Nature has a way of changing things but we are better prepared to manage any disruption."
Results yesterday showed Network Rail made profits of £1.2billion in the past year. It invested more than £2billion in the railways.
The company, which has responsibility for the track and signals, said 89.3 per cent of trains arrived on time over autumn — up from 86.5 per cent a year ago.
But it blamed cable theft for worse-than-expected punctuality between March and October. RMT union leader Bob Crow claimed cost-cuts had left stations unmanned and exposed to thefts.
3 builders in line for rail deals
THREE British construction firms were given a huge boost yesterday as CROSSRAIL handed out £300million worth of building work.
KIER featured in an international consortium that bagged the £200million contract to transform Farringdon station in London.
And both BALFOUR BEATTY and MORGAN SINDALL were part of a consortium handed a smaller £100million contract to build Crossrail station and rail platforms in Whitechapel, East London.
The contracts are the last big construction deals to come up for grabs on a project that aims to transform east-west commuter travel across the capital.
A total of £16billion is going on the project.
Kier chief exec Paul Sheffield said: "We're delighted to be a part of this major scheme."
Morgan Sindall said work would boost its coffers by £29million. The Bank of England on Wednesday warned its agents believed the construction sector was already edging back into recession.
Official figures yesterday said the sector shrank 1.9 per cent in September.

SOUTH WEST WATER owner PENNON revealed a 2.3 per cent dip in half-year demand as industrial and commercial customers cut back.
Green in Top talks on China
TOPSHOP billionaire Sir Philip Green is preparing to gatecrash China.
The retail veteran last night revealed his Arcadia Group had "started a dialogue" about taking his teen brand to the Far East.
He told Sun City: "Our thought is a national chain across the main and second cities.
"It wouldn't be a franchise — we would own it. But we're just looking whether to go with a partner or on our own."
Arcadia has 600 franchised outlets in 36 countries. Topshop launched in the States last year in New York.
A second store opened in Chicago in October with a third planned for Las Vegas in March.
Arcadia chief exec Ian Grabiner said the group was testing two or three "pop up" shops or concessions in other stores overseas.
Dixons' big hope for Xmas
THE last healthy electricals chain on the high street yesterday insisted shoppers WILL spend this Christmas.
John Browett, head of Currys and PC World owner DIXONS RETAIL, dismissed fears festive trading will flop as customers cut back.
He told Sun City: "There are still plenty of people shopping on the high street. It's tough but there's no evidence trade has fallen off a cliff."
Results showed Dixons' UK sales slumped five per cent in the 12 weeks to October 15. They were down ten per cent in the previous 12 weeks.
But Mr Browett said the group was gaining market share. American rival BEST BUY last month announced plans to quit the UK and COMET was sold for £2.
Including Europe, half-year losses were £25.3million — up from a loss of £6.9million a year ago.
British Gas bills add up profit
BRITISH GAS will publish how much profit it makes on its bills for the first time in a nationwide charm offensive.
The profit per customer will appear alongside the cost of Government green levies and transmission charges as British Gas looks to win back "trust".
The energy giant is also reducing its number of tariffs. Customers will now go through a three-step process — whether they would like a variable or fixed tariff, paper or online bill, and how they would like to pay, for instance by direct debit.
Boss Phil Bentley admitted some prices may rise as deep discount web offers go. But he said the company would be more "honest".
He added: "Customers are clear — they want simple tariffs, transparent bills and a fair deal on energy."