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HOUSE PRICES ARE SET TO RISE

15% BY 2013

Experts are indicating that the average house price in London will rise by 15.1 per cent over the next five years, according to new research. Average values across England will rise by a similar amount, it adds. The average London price is £354,757.

David Orr, chief executive of The Nation Housing Federation said: "Despite concerns about the current downturn, house prices could increase substantially over the mid to long term.

THE FUTURE'S BRIGHT

By the end of the year house prices could start to rise again, according to data complied by Lombard Street Research (LSR).

The LSR housing affordability index, which compares house prices to other financial indicators such as average earnings and mortgage rates implies that those now buying a house are doing so at a reasonable price.

"There are actual signs from the market that things are actually improving. There's no reason why you couldn't have a month by the end of the year where prices go up by 0.1%," said Jamie Dannhauser from the LSR.

An improvement in the property market would be welcome news for many small business owners.

LANDLORD GLEE AS RENTAL YIELDS ROCKET

There are signs showing that with house prices slowing down, that rental yields are on the increase with as much as 11.3 per cent in some areas of London.

Healthy yields are important to landlords as it suggests they are generating strong cash flow, or rental income, from their property and many property investors will use the yield to judge the financial viability of a potential buy-to-let purchase.

”Many landlords who have been in residential property investment for a considerable time have low levels of gearing – on average 36% – and significant amounts of equity in their portfolios. They know that at times like this, when people are reluctant to commit to home purchase, there is growing tenant demand combined with plenty of opportunities to buy extra rental properties in a less competitive market.”