Paul Smith, chief executive of Haart estate agents, commented: “This year, we have seen a significant increase in average property prices across the UK reaching double figures in some areas of the UK, as demand outstrips supply and the economy remains strong. In particular, London has performed well, with prices rising by 8 per cent this year. With record city bonuses expected this year we anticipate a high level of activity to carry into the New Year pushing the average house price up by as much as 10 per cent in the first six months.
“However, with two interest rate hikes this year, affordability constraints have been bought to the fore and in many areas in the UK we are seeing a very modest growth. Despite the low level of housing stock it is still a buyer’s market and properties that are overpriced will not sell. As a result, we predict that house prices will cool down in the second half of the year and annual growth is set to be 4-5 per cent. Another rise in interest rates could cause a negative change in homebuyer attitudes and significantly dampen activity in the housing market.
“The introduction of Home Information Packs (HIPs) will also contribute to the year of two halves in terms of the predicted performance of the housing market, as many sellers rush to put their house on the market prior to the mandatory date in June 2007. However, we don’t expect it will have a long-term impact on the market.”
