Latest forecasts for the housing market from the the Centre for Economic Business Research published today predicts that UK home owners will face a “soft landing”.
But at the same time the forecasts indicate that average UK house prices will be no higher in 2007 than in 2004.
The forecasts are contained in the first issue of cebr Quarterly Housing Forecasts, updating the analysis contained in cebr's Housing Futures 2024, which was issued for the 34th year in April 2004. They update the short term house price outlook for the UK and each region and country to take account of latest economic developments.
The report draws attention to the probability of rising interest rates and slowing growth in GDP. It argues that whereas for the past 4 years the UK had benefited from strong consumers spending boosting GDP growth and leading to rising incomes, over the next 4 years some of this process will go into reverse. Consumer spending growth is likely to slow and at the same time mortgage equity withdrawal will fall back slightly from its current record levels.
The regional analysis predicts that the parts of the UK where house price inflation will be least buoyant are the North East of England, Scotland and Wales. In all these areas house prices are predicted to be more than 10% lower in 2008 than in 2004. But in London and the South East of England house prices are predicted to be higher in 2008 than in 2004.