Halifax: 0% growth in 2008

Monday, 10 December 2007 12:00 AM

House price inflation will slow to 0% per cent over the course of 2008, according to Halifax.

The UK's largest mortgage provider argues negative real earnings growth and the potential of higher interest rates will both have a dampening effect on the market.

However, this slowing market should be taken in context.

Average property prices have risen by 179 per cent over the past decade - up from an average price of £70,000 in late 1997 to £195,000 at present, according to Halifax.

Yet, prices will be prevented from falling by a shortage of supply in the market - partially due to the failures of house builders to meet demand - along with strong economic fundamentals, according to the lender.

"The UK economy is set to extend its record-breaking run of continuous growth. The level of employment - a key driver of housing demand - is expected to stay at record highs in 2008," the bank said in its report.

The picture, is however, varied across the country.

"Modest price growth is expected in southern England and Scotland during 2008. Worsening affordability and weakening economies will lead to a small fall in prices in northern England and the Midlands," said the Halifax.

The north/south differential in prices is also expected to increase over the course of the year.

As a consequence of moderating prices, transaction numbers are also expected to fall.

Halifax now expects one million property sales in 2008, down from 1.17 million this year.

Finally the average deposit paid by buyers is on the increase, with the average buyer paying 20 per cent in 2007, up from 11 per cent in 1997.

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