UTB: House prices flat in 2008
Tuesday, 29 January 2008 12:00 AM
Changes in interest rates and resurgent demand are likely to ensure house prices do not fall in 2008, but remain flat in real terms.
There has been growing speculation average prices could fall during the coming 12 months, but this is unlikely according to housing development specialists United Trust Bank (UTB).
"The recent quarter percentage cut in interest rates to 5.5 per cent and the further cuts anticipated in the first half of 2008 is good news for the slowing house market," said Roger Tidyman, managing director of UTB.
"This should help to entice some nervous buyers back into the market and increase turnover for developers."
Buyers returning to the market may cause an upsurge in an already robust demand for property, ensuring prices remain flat.
"We expect modest price falls in the first half of the year with some recovery as further interest rate reductions take effect and mortgage lenders recover their appetite in the second half of 2008," continued Mr Tidyman.
"We predict flat nominal house prices over all in 2008."
Concern has been mounting that a tightening of lending criteria, moderate real increases in wages and fears over the future direction of the market would all combine to cause a fall in prices.
However, such a fall is unlikely in the long-term according to UTB.
Yet, tougher trading conditions will force housing developers to be more inventive in their choice of project and finance.
"In difficult marketplaces like these it is crucial for all property developers to research buyers' needs and local demand in order to build appropriate product," explained Mr Tidyman.
"Increasingly new models of development which may initially be less profitable but which will be less volatile should be of interest.
"Building a mix of private and shared ownership housing in association with a registered social landlord may be one solution," he concluded.
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