The CML expects gross lending to total £271 billion in 2005 compared with £293 billion this year. And net lending is likely to be around £94 billion, down from £103 billion this year. These lending volumes mark a return to the more normal levels similar to those of 2002.
The CML continues to expect a slowdown in the housing market, but believes this will be felt mostly through lower numbers of transactions rather than in any widespread price reductions. Transactions are likely to total around 1.23 million next year, compared with an estimated 1.64 million this year.
Looking beyond next year, the CML expects a continued slower market in 2006 and 2007. The likelihood is that the housing market is set for stable but slower levels of activity for some time, as the market adjusts from its recent exuberance.
CML Senior Economist Jennet Vass comments: "Although our forecasts herald a slower market, there is good news here for first-time buyers over the longer term. Essentially, as earnings grow, houses are likely to become gradually more affordable again.
"Our house price forecasts expect continued subdued growth in prices over the next three years. Although there may be some modest price falls in some areas, we expect national average price growth to remain positive and we do not envisage any dramatic market adjustment. Although our price forecasts are at the high end of the spectrum of those that have so far been published, we see modest price growth as consistent with the positive outlook for the wider economy and with the ongoing mismatch between housing demand and supply."
