It has instead predicted house prices will rise by an average of 3 per cent, picking up in the latter half of the year as interest rate pressures ease.
However, Savills average forecast for the country hides some substantial variations. The mainstream London and the South East markets have forecast growth levels of 5 per cent and 4.5 per cent respectively, whilst for the North East, the North West and Yorkshire and Humberside it is predicting just 0.5 per cent.
Scotland is still benefiting from relatively low historic house price growth and a recent reversal of the long term trend of out-migration; prices are expected to rise at above the rest of the UK.
Savills believes that tightened lending criteria will reduce accessibility to mortgage finance and the differential between lending rates, impacting on the growth of the buy-to-let sector and first-time buyer numbers.
“Although repossession statistics show steady increases since 2004, they remain low in the context of total transaction numbers and currently only constitute about 2 per cent of stock turnover," said Lucian Cook, director of Savills research.
“Past experiences tell us that turnover is the first casualty of a shift in market sentiment. In 2005, UK house price growth was just over 4 per cent and turnover of stock was approximately 15 per cent lower than the five year average – we expect a similar result in 2008 as potential movers adopt a wait and see approach.
"While repossessions may well rise but this is more likely to be a symptom of the slow down rather than the possible cause of something more alarming."
He concluded: "House price growth has been slowing since the beginning of the year in the mainstream markets as interest rate increases have heightened affordability issues. We expect this differentiation to continue during 2008 through a period of slower economic growth.”
