In his predictions for the coming year, David Bexon, managing director of SmartNewHomes.com has said that coupled with a dramatic reduction in interest rates, house prices will climb by between 2 and 4 per cent and family homes will experience steady growth.
However the sales and price growth of apartments will suffer as a direct result of over-supply.
Bexon said: "We have seen steady growth throughout the year, with house prices up 0.7 per cent on last month and 0.7 per cent over the last year.
“I believe that 2008 will be a more positive year for the new homes market and I predict an average price increase of between 2 per cent and 3 per cent for new homes over the next year.
In a far more cautious market, Bexon has also drawn attention to the onus shifting away from moving home and back towards making home improvements to extend the time they spend in their current home - especially buiiding extensions and converting rooms.
He continued: “Developers will continue to use incentives, so the New Year is going to be a better time for first-time buyers, who will capitalise on flattened prices and extra incentives, combined with expected lower interest rates.
“With city bonuses taking a knock this year following the banking crisis, I expect buyers to be more cautious in London which could bring down the overall average new home price. High prices in London will continue to fuel outward migration, making other areas such as the North popular with buyers looking to capitalise on a better quality of life.
“In the long term I expect prices to stabilise rather than rise dramatically as we have previously seen, particularly with the Government’s aims to increase the number of homes to meet demand."
