According to the cebr’s ‘Consumer and Housing Prospects’ report, house price inflation will be 7.6 per cent this year but this growth would mostly be accumulated in the early part of 2007 as a result of City bonuses and a strong financial market.
However, as these factors weaken, growth will tail off so that inflation in 2008 could be as little as 1.5 per cent, the study suggested.
Jaspreet Sehmi, economist at cebr, said: “Despite the recent rate rises, we expect to see no immediate impact on house prices as other factors, such as the continued strength of the financial services sector, remain more important. By the end of the year, house prices will begin to slow and, although we continue to expect growth in 2008, it will be much more limited.”
Despite slower growth, prices will continue to climb because of the fundamental factors of the housing market, such as the issue of supply and demand, and could hit a UK average of £225,000 by the end of 2010.
Jonathan Cornell, technical director at Hamptons International Mortgages, commented: “We’ve not seen a big impact yet and there’s nothing to suggest confidence has been dented, so we’ll wait and see.”
