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House price predictions favour slow growth

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by Gill Montia

An abundance of predictions for the 2008 housing market have left most homeowners confused because they range from expectations of a single digit increase, to a housing market crash.

Taking an overview, Capital Economics, the economic forecasting consultancy, is anticipating price falls of 3% during both 2008 and 2009.

This position is supported by latest figures from Hometrack, the property website, which show a 0.1% decrease in prices during October.

However, Nationwide reported that house prices rose by 1.1% during the month, whilst pointing out that “underlying market activity is clearly slowing.”

Nationwide will publish its official house price forecast for 2008 this month but Fionnuala Earley, the society’s chief economist, expects price growth to be broadly flat during the year.

The Council of Mortgage Lenders puts a figure of 1% on a 2008 rise, given that a continuing shortage of property will help underpin values.

Despite reporting an October decrease, Hometrack expects a 1% price rise in 2008, followed by 2% in 2009.

Knight Frank is more optimistic and predicts that UK prices will increase by 3% in 2008.

The estate agent believes rises in Northern Ireland, Scotland and southern England in particular will be well above this level.

Those new to homeownership, and agnonising over the prospect of negative equity, will be heartened by the number of forecasts showing property price increases.

However, many first-time buyers are remaining with parents or in their rented accommodation hoping for a crash, as this could be the only way they are likely to get on to the housing ladder.

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News posted: November 5, 2007

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