According to the lender, house price growth was 9.3 per cent in 2000, and will be between 11 and 12 per cent by the end of 2001, but is set to drop to 6 per cent next year.
Alex Bannister, group economist at the Nationwide, said: "The combined effects of unemployment prospects, weaker pay and bonuses growth do however suggest that, after six successive years of price buoyancy, annual house price inflation will drop back to around six per cent by the end of 2002. Around the regions price growth is likely to remain restrained in areas affected by the manufacturing slump. Affordability is becoming a constraint in the South-East. In particular, we would expect London to see growth fall back more sharply than in most regions."
Bannister feels that even though house prices rose by around 12 per cent, well above the predicted 7 per cent, this will not happen again next year. This year house prices have been boosted by stronger consumer confidence arising from greater take-home pay and falling interest rates. However, next year house prices are expected to be affected by regional conditions as the economy struggles to avoid recession.
