Hometrack agrees with Capital Economics’ report stating that the house price boom has finished. Property prices have decreased a total of 0.5% over the last three consecutive months (Hometrack National Survey – July, August, September 2004) indicating that the market is definitely stabilising.
However, Capital Economics predict that house prices will fall by 20% - a figure that Hometrack strongly disputes.
John Wriglesworth, Hometrack’s chief housing economist comments: “The 20% fall in nominal house prices as forecast by Capital Economics is well overblown. It is true that house prices have reached the end of the recent boom period, which is why the Hometrack house price inflation forecast has been reduced to 0% for 2005. But the economy at present is in no way similar to that of the early 1990s. Interest rates are currently at 4.75%, compared with 15% in 1991, incomes have increased, as have employment levels, and mortgage lenders are lending out higher multiples of income. Over the next two/three years the economy will continue to bump along a higher plateau, growing at a slower rate, but still growing. There is more chance of the earth stopping spinning than an imminent housing market crash.”
