' Although we’re not expecting to see a market blow-out, the unbalanced relationship between house price rises and earnings will force a slow puncture in the market which should cause it to deflate throughout 2004."
He continues, "House price inflation is slowing - which means affordability isn't being stretched at quite as rapid a rate - but combine this with predicted interest rate rises, and the outlook for affordability will not be as positive by the end of the year."
"Although our market has been fuelled by record levels of remortgaging, the lifeblood of the mortgage market - first-time buyers - will continue to find it hard to make a first step onto the housing ladder. Earnings simply aren't keeping pace with house price inflation, so affordability is inevitably suffering. But of course we should remember that, compare with 10 years ago, the average proportion of income spent on a typical mortgager still remains significantly lower."
