House prices 'set to stall' in 2008
Published: 16-Nov-2007
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House price inflation is set to grind to a halt in 2008 with economic conditions impacting on the current rise in the value of residential property available to landlords, according to a new report.
The Nationwide house price forecast 2008 predicts that the rate of house price inflation will fall from its current level of 9.7 per cent to 0 per cent next year, due to a combination of economic factors.
Tighter credit conditions, economic slowdown and lower levels of buy-to-let demand will all serve to slowdown the rate of price inflation, the report claims.
Fionnuala Earley, Nationwide's chief economist, said: "The main reasons for this more subdued outlook lie on the demand side of the market, where a slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations appear likely to reduce the level of activity.
"Thesupply-side of the market will still be characterised by widespread housing shortages, in spite of government targets to increase house building. These shortages will provide some offsetting support to prices amid the weaker demand environment, particularly in the south of the UK," she added.
Recent figures published by the Halifax revealed a 0.5 fall in house prices in October 2007, with the average residential property in the UK now costing just over £197,000
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