News

A small fall, then house prices 'will climb again'

The Daily Mail - 4th February 2005

Predictions of a collapse in the property market were rejected yesterday by both the government and Britains biggest mortgage lender.

The treasury argues that prices will fall by a modest one per cent in 2005 before small rises in the following years.

The Halifax said house prices rose by 0.8 per cent in January taking the average up to £163,748.  Both figures fly in the face of claims that the market is locked into a downward spiral which will see the average age value slump by 20 per cent.

A treasury internal forecast predicts that after the small fall this year, prices will rise in line with earnings in 2006 and 2007, which is likely to be around 3 to 4 per cent a year.  The halifax reported a slow fall in the annual rate of property value increase.  This means it is unlikely the Bank of England will cut interest rates in the near future.  The pressure could be for a quarter point rise, taking the figure up to 5 per cent.  The market has slowed as high house prices and rising interest rates have squeezed out first-time buyers.  Halifax cheif economist Martin Ellis said; 'The housing market continues to slow with the annual rate of price inflation easing further in January.  'Home prices have increased by only 1.4 per cent over the past six months, causing the annual rate to decline from a peak of 22.1 per cent last July to 13.7 per cent in January.  This is the lowest annual rate since December 2001.'