Alex Bannister, group economist, finance and planning, at Nationwide, said: "The housing market ended the year with considerable momentum. Prices rose by a seasonally-adjusted 1.9 per cent, compared with a 0.7 per cent increase in November."
"It is not just prices that ended the year in buoyant fashion, so have activity levels. House sales in October were 14 per cent higher than a year ago at 140,000, while remortgaging in November is estimated to have been around 30 per cent higher than a year ago. Over the course of the year the price of an average UK property rose by over £11,000 or by 13.8 per cent. This makes 2001 the strongest year for house price growth since 1988."
"Strong performances were not just confined to London and the South East as has been the case over the last few years. All regions except Scotland and Northern Ireland recorded double digit increases. This did not prevent a widening in the North/South divide, with the gap between average prices in London and the North East rising by £15,000."
"Next year will see higher unemployment and a weaker economy, but the UK should avoid recession. We expect UK prices to rise by 6 per cent next year, with the slowdown in price growth more pronounced in London and parts of the South East. House sales will be held back by fewer first time buyers and owners trading up. Remortgaging may also moderate although it will remain a significant feature of the mortgage market."
Bannister anticipated that next year’s growth would be smaller for a number of reasons. First, economic uncertainty is likely to limit the number of first-time buyers entering the market and, with lower price growth, existing homeowners may be more hesitant in trading up the market. Consequently we should expect to see fewer sales next year.
"We also expect the number of people remortgaging to decline modestly as lenders make remortgage deals less attractive and the number of potential mortgage switchers will have shrunk. Sales are set to decline modestly from 1.45 million this year to around 1.37 million next year while remortgaging is very unlikely to match this year's estimated record number of around 750,000," said Bannister.
