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NAEA: House prices flat in 2008

NAEA: House prices flat in 2008

Wednesday, 12 December 2007 12:00 AM

House price increases will slow to a halt during 2008, according to the latest predictions from the National Association of Estate Agents (NAEA).

The organisation argues annual house price inflation will flatten to 0%, but will not drop due to underlying strengths in the market.

"The market as a whole is clearly not as strong now as it has been over the past seven years and this is down to a combination of factors," said Peter Bolton King, chief executive at the NAEA.

"While we expect to see a much more subdued picture in 2008, the underlying strengths remain the same and we are hopeful that these will help the market to weather adversity over the coming year."

The market faces a number of uncertain factors, however, which could prove pivotal in deciding in which direction the market heads, says the NAEA.

For example uncertainty from the continuing credit crunch, which has restricted lending for mortgages, along with the introduction of home information packs (Hips) could both destabilise the market.

Hips will be compulsory for all properties in England and Wales from December 14th, with estate agents fearing they will cause a fall in both new buyers and sellers.

However, key factors are also supporting prices.

"These factors relate to the principle of supply and demand. At a very basic level, if supply is limited and demand is high then prices will remain stable or rise. We know that supply is a problem for the UK - a fact highlighted by the government recently as it revised its house building targets upwards," said Mr King.

"Similarly, we know demand will continue to increase. The population is rapidly growing and at the same time the number of single person households is also on the rise."

Across the country London and the south-east will remain strong as demand remains stable.

However, other areas - particularly those suffering from lower employment - are likely to see prices plateau or perhaps even depreciate over the coming year.