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December House Price Increase

Thu, 10 Jan 2008
House prices went up 1.3% in December, in contradiction to a property price crash.

Halifax data highlights that annual house price growth in the last quarter of 2007 declined to 5.2% from 6.2% in November and 11.4% in August.

The forecast for 2008 is flat house growth. House prices will be held up by a strong economy, healthy levels of employment as well as the Bank of England's expected interest rate cuts for 2008.

The housing market carried on slowing down in the last three months of 2007 with prices a little bit lower than the previous quarter.

Increased mortgage repayments due to the five interest rate increases between August 2006 and July 2007 as well as decreasing real earnings have placed pressure on householders incomes. This has led to a slowing down of house price growth as well as housing market activity in the past months.

If inflation proves to be a greater barrier to the Bank of England's ability to reduce base rates there is not likely to be a real decline in house prices.

Mortgage lenders and the effects of the credit crunch are critical to the property market future, rendering securing a mortgage much more difficult.

A key factor for first time buyers keen to get that first step onto the property ladder is likely to be the willingness of mortgage lenders to offer finance on attractive terms.

Despite the predicted stagnation of property values, the Halifax is reminding property owners that house prices have gone up 182% over the last ten years, leaving a £70,000 house in 1997 presently worth £197,000.
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