Nationwide Building Society predict house prices will increase by 2 per cent. Charcol agree that prices will increase but by 4 per cent while Halifax predicts that they will fall by 2 per cent.
But all forecast a period of relative stability rather than a crash.
HBOS has forecast a 2 per cent fall in 2005 but beyond the year ahead it expects the market to record modest price increases, improved affordability and that first-time buyers will return to the market in larger numbers than recent years.
It predicted the base rate has peaked at 4.75 per cent and that the Bank of England will reduce rates by half a percentage point during 2005.
Martin Ellis, chief economist at the Halifax, said: “We expect the UK housing market to continue to slow with a slight fall in house prices likely in 2005. Sound economic features mean that the market will remain in good health: UK plc is in good shape.
“There will be better news for first-time buyers who will start to find it easier to get a foot onto the housing ladder.”
Ellis added: “The softening in the housing market is expected to trigger a reduction in interest rates next year as the Bank of England acts to ensure that consumer demand and the housing market remain well underpinned.”
Nationwide is anticipating that the price of average UK properties will rise by just 2 per cent in 2005 with more realistic price expectations to act as a break on the market.
Alex Bannister, group economist at Nationwide, commented: “Following the increase of around 13 per cent in house prices during 2004 we expect price growth in the 12 months to December 2005 to be in the range of 0 – 5 per cent.
“However, the likelihood is that annual price inflation will end next year around 2 per cent. In contrast to 2004, monthly price increases are expected to be much more uniform across the year.”
Ray Boulger, senior technical manager at Charcol, said: “It is interesting that Nationwide and Halifax have different expectations for the housing market next year, although their forecasts actually only vary by 4 per cent.
“They do agree on the fact that any decline in house prices will be temporary. The housing market has certainly softened considerably in the latter half of the year but our estimate is that house price inflation will be around 4 per cent for 2005.”
Mark Chilton, CEO of Purely Mortgages, said: “The current gloomy projections over the housing market will continue through into the first quarter of next year but the reality will be different.
“Low volumes mean that homeowners in this market will stay put rather than crystallising losses and forced sellers will dominate the market data. Real values will therefore not shift as much as the indicators suggest.
“The national picture will be saved by reasonable growth in warm spots around the rest of the UK with greater transactions in these areas, leading to an overall increase in the Halifax index of 3 per cent for 2005. However prices in certain areas could fall by as much as 15 per cent.”
