In common with the survey produced by the Nationwide Building Society, they show the rate of house price inflation falling away sharply on the basis of these three indices, house price inflation currently stands somewhere between 5.5 and 6.4%.
Simon Rubinsohn, chief economist, Gerrads, said: "HBOS provided a generally upbeat analysis of the outlook to accompany their report with house prices continuing to be underpinned by what they describe as ‘sound fundamentals’. Their forecast remains unchanged with prices expected to decline by 2% over the whole of the UK during 2005. Nationwide’s assessment is not markedly different.
"Near term, there are good reasons for believing that house prices will continue to trend sideways. Despite the sharp downturn in high street activity, consumer confidence according to the GfK index remains relatively firm and the upturn in the volume of mortgage approvals seems broadly consistent with this story.
"Our major concern is, however, the employment outlook. The recent Cips survey of the service sector suggested that hiring intentions are beginning to weaken in this relatively prosperous part of the economy. Meanwhile, the Cips survey of manufacturers indicated that jobs are continuing to be cut in this hard-pressed sector. Significantly, it is not hard to envisage some redundancies also coming through in retail if consumers continue to remain on the sidelines.
"This leads us to the conclusion that it may be premature to talk of a soft landing in the housing market. The real test of this proposition will only come next year as companies begin to respond to the more modest pace of economic growth by reducing their headcounts."
