Nationwide predicted that momentum in demand from 2006 and a shortage of supply will support prices in the early part of the year, but deepening affordability problems and cutbacks at the Bank of Mum and Dad will cause a sharper cooling and a lower outturn by the year end.
Nationwide added that London and the South East will drive the market, while price growth in the North, Midlands and Wales will be fairly flat. They said Northern Ireland and Scotland should expect to see much slower house price growth in 2007
Commenting on the figures Fionnuala Earley, group economist at Nationwide, said: "Nationwide expects the rate of house price growth in 2007 to be relatively robust at between 5 per cent and 8 per cent. Momentum gathered in 2006 will flow into the early part of 2007, and this will be supported by a buoyant economy, stable interest rates and a continuing shortage of housing supply. We can therefore expect to see a few months of double-digit annual house price inflation in the first half of the year. However, increasingly poor affordability and likely cutbacks at the Bank of Mum and Dad will cause the rate of house price growth to move back into single digits in the latter part of the year."
