The Ernst and Young Item Club on Monday said there will be rapid improvement in housing market but fears of a housing market bubble are misplaced.
Further, in the latest quarterly autumn forecast, the think tank raised U.K.'s growth forecast citing improving outlook for the housing market and consumer confidence.
For 2013, growth is seen at 1.4 percent, up from the prior estimate of 1.1 percent. Likewise, projection for next year was lifted to 2.4 percent from 2.2 percent.
With the support of the Government's Help to Buy Mortgage Guarantee Scheme, over a million people are likely to move home this year alone, the Item Club said. It forecast investment in new housing projects to increase by 7.5 percent next year and an additional 10 percent in 2015.
The boost to housing demand will have a knock on effect on house prices, rising by 3.5 percent this year and 6.6 percent in 2014. But it said the chances of seeing another housing market bubble are extremely slim.
According to Item Club, the recovery of the housing market, combined with falling unemployment, rising real incomes and improving confidence levels, will help to keep the tills ringing on the high street.
Consumer spending is forecast to grow by 1.6 percent before rising to 1.9 percent in 2014. However, the think tank said the most significant boost to UK growth will come next year, when the revival in business investment and exports finally kicks in.
Business investment is estimated to rise nearly 7 percent next year and 9.4 percent in 2015. Item club projects exports to grow by 2.5 percent in 2013, rising to 5.3 percent in 2014 and 6 percent in 2015.
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