A bounce in the housing market will drive the UK back to economic health, according to the EY ITEM Club.

Predicting little risk of a housing ‘bubble’, it said that recovering house prices would boost spending on the high street and fuel GDP growth.

More certain market conditions will encourage house-builders to increase their rates of construction, which in turn will have a positive impact on demand for household goods. ITEM’s analysis comes at a time when the International Monetary Fund has upgraded its prospects for the UK economy.

In its quarterly report on the economy, ITEM said that Government schemes will boost house prices by 3.5% this year, by 6.6% next year and by 6.7% in 2015, as recovery across the country starts to gather momentum. Transaction numbers are expected to increase by 11.9% this year.

Strutt & Parker’s recent National Open House Day, on Saturday 28th September, saw 740 properties across the country open their doors to prospective buyers. It resulted in a record number of viewings, and well over 100 offers being made.

Tim Page-Ratcliff, from Strutt & Parker’s Lewes office, said: “The warm weather held out and there was positivity amongst buyers, many of whom are now focussing on their sale or purchase, against the background of better confidence in the market and a genuine feeling that the recession is behind us. They are now much keener to make a move.”

Until now, only London and the South East have seen house prices return to pre-recession levels, with London prices now 17% higher than in January 2008. In the South East, they have risen to 0.7% above their previous peak, although this isn’t the case in the upper price sectors of the country market, where there is still some way to go. Excluding the two regions, house prices across the UK are still down, but the signs of encouragement are there.

Page-Ratcliff concludes: “As the leaves fall off the trees and autumn starts to drift into winter, there continues to be real evidence of sustained recovery in the housing market. Unemployment is falling, real incomes are starting to rise, confidence levels are improving and inflation is being held in check. The underlying indicators are encouraging.”