House price confusion

Published:  09 October, 2009

LONDON: Merchants hoping for improved RMI spend will be buoyed by an optimistic house prices forecast from Morgan Stanley.

It took a contrary view on house prices trends expecting prices to rise over the next 12 months. Morgan's position follows yesterdays report by Fitch Ratings indicating that they have a further 17% to fall.

Morgan Stanley said," We believe supply will be constrained in the long term as developers struggle to acquire new land, sit on unviable sites and reduce densities. This could support house prices even in a higher interest rate environment."

Morgan Stanley's top picks in the sector are mid-cap stocks Barratt Developments - up 171/2 to 2663/4p - and Taylor Wimpey - 13/4 higher at 45p.

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