Housing Market News And Views House Price Predictions For 2008

Date Published:

28/05/2008

Will House Prices Rise In 2008?

We asked an number of leading industry experts what they thought would happen next year. Here's what they said:

John Charcol, independent mortgage experts, predicts average house prices to fall by two per cent.

Knight Frank, estate agents, anticipates prices will rise by three per cent.

Royal Institute of Chartered Surveyors (RICS) expects house prices to be broadly unchanged in 2008 but acknowledges that the market could experience some near term weakness.

The National Association of Estate Agents (NAEA) forecasts a 0 per cent rise in the average house price.

Nationwide Building Society speculates that house price inflation is expected to drop to 0 per cent by this time next year.

This straw poll of five experts reveals three believe house price growth will be static in 2008; one - Knight Frank - predicts it will rise by three per cent, while John Charcol forecasts a fall of two per cent in the coming year.

What Is This Based On?

The UK Economy is forecast to grow by two per cent to 2.25 per cent in 2008. It is expected to deliver its 65th successive quarter of GDP growth during this year.

Interest Rates fell in December 2007 for the first time in three years. John Charcol predicts they will fall to five per cent by end 2008, down from 5.5 per cent in January 2008.

Inflation Measured by the headline retail price index, inflation is likely to move slightly above four per cent during 2008 says Halifax in its Economic Forecast for 2008 report. Should house price inflation register 0 per cent as many predict, house prices will fall in real terms.

Employment is set to remain at a record high. The number of people in employment in 2007 Q3 was 179,000 higher than in 2006 Q3, at 29.22 million, says Halifax.

Consumer Spending Growth is forecast to ease significantly in 2008, but nevertheless it is predicted to rise by 1.9 per cent, claims Halifax.

Housing Demand The population is rapidly growing, boosted by a net immigration surplus. Equally, the number of single person households is also on the increase.

Housing Supply There is an undersupply and the government has called for three million new homes to be built in the UK by 2020 to address the housing shortages.