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(London.CityRegions.com, April 21, 2013 ) London, UK -- The new and controversial efforts of George Osborne in regards to rekindling the housing market may help to prevent Britain's economy from the flat lining that has happened this year, according to a new forecast.
Within the new quarterly health check of the economy, the Ernst & Young Item Club stated that a million homes would indeed change hands in 2013, which marks a 5% increase than the totals seen in 2012. They would also constitute the highest numbers since 2007.
"We expect a million households to move this year, helping growing families and labor mobility," said Peter Spencer, author of the report, which is the only independent forecast to use the Treasury's model of the economy. "Sales of household appliances and other expenditures involved in moving home will also be buoyant."
The Treasury also announced an increase in the series of measures that will underpin the housing market, including the “funding and lending” scheme. That particular measure has been the a point of debate, as it is set to offer cheap loans to banks in an attempt to bring down the mortgage costs across the country. In the budget meeting of March, the chancellor promised to introduce a taxpayer-backed mortgage guarantee scheme for 2014. Criticism followed shortly thereafter, as those who warned that because many households were still sitting on heavy mortgage debts for the year, reinflating such prices for housing was likely to be a dangerous move.
Spencer insisted that there ought be a “rebalancing” that Osborne had hoped for, and would likely be impossible while the eurozone economy was weak. "Although it's not a long-term strategy, stimulating the housing market and the high street will keep GDP growth positive. Unbalanced growth is better than no growth," he said.
A Treasury spokesperson stated that: "The government is committed to building a stronger economy and this report highlights the real and positive impacts of government policies to support hard-working families and those who aspire to own their own homes."
Director of research at housing research company Hometrack, stated: "I definitely think the air of optimism will continue to grow, but I don't think we're suddenly going to see strong house price growth."
The government is still anxiously awaiting results that will show whether the GDP figures will show an economy that is slipping into a triple-dip recession or not. That latest jobs numbers may also show unemployment has increased, further concerning the government.
Howard Archer, of information analysts Global Insight, said: "We expect the labour market data to show further signs of fraying strength in reaction to the economy's persistent softness."
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