View more on these topics

House prices expected to fall, says CEBR

The Centre for Economic and Business Research has admitted it is nervous at the scale of continued house price inflation.

Taking the latest views on economic prospects into account, the research body has said it is now more nervous about UK economic prospects and that house prices have risen so far even faster than they had originally predicted. The CEBR adds that it now expects UK interest rates tol be lower than at present for the next three years.

Even with rate cuts house price inflation is expected to decelerate rapidly. From a forecast peak of 25.6% in November on the Halifax Index we expect a fall to 2.6% by the first quarter of 2004. The driving forces are likely to be the growing problem of affordability and the increasing supply of housing on the market.

However, some good news for homeowners is that the CEBR does not expect a general year-on-year fall in house prices, though this will occur in some areas such as Central London, where prices are down about 10% year-on-year.

The CEBR adds that it expects UK households will withdraw £39bn from their mortgage equity in 2002, financing 5.9% of consumers&#39 spending compared with 3.8% in 2001.

CEBR spokesman Mark Pragnell, says: “Our forecast that house price inflation will fall implies that equity withdrawal will also diminish – we predict that it will pay for 5.4% of consumers&#39 spending in 2003.

“Although this total remains high, the fact that the ratio is falling means that it will be a negative factor for consumer spending growth which we expect to slow sharply to 2% or less. Retailers will need to beware of consumer spending growth grinding to a halt.”

Recommended

Pink launches Mortgage Express exclusive

Pink Home Loans has launched a new exclusive, fees-free, buy-to-let remortgage in conjunction with Mortgage Express. The product offers a discount of 0.26% for three years, giving an initial pay rate of 5.49%. In addition, there are no arrangement or valuation fees. David Copland, sales and marketing director at Pink Home Loans, says: “This is […]

Promise of &#39seamless&#39 mortgage processing

Software company Exigen has developed a technology solution that aims to achieve cost savings and seamless processing across all mortgage operations.The model allows the different systems used by lenders, packagers, brokers and all other parties in the mortgage processing chain to link up. It is already established in some parts of the Australian mortgage market.The […]

New CML review of the Northern Ireland housing market

Northern Ireland continues to have the highest proportion of homeowners in the UK at over 72%, according to the 2002-2003 edition of the Council of Mortgage Lenders&#39 National Markets Review. However, the overall size of the Northern Ireland market is small compared to the UK as a whole. Just 3% of all mortgages in the […]

ABI launches initiative to help boost retirement savings

The Association of British Insurers yesterday launched its Budget for Savers initiative, just weeks before the government publishes its pensions Green Paper. Budget for Savers sets out a series of practical and affordable proposals to help UK workers save more for retirement through the workplace. The ABI initiative comes as new, independent research by IFF […]

Newsletter

News and expert analysis straight to your inbox

Sign up