In the same week as property website Rightmove says it sees first signs of an orderly slowdown in the market, a leading economics think-tank has warned of two years of falling property prices, but insisted the market is heading for a soft landing.
Rightmove had said yesterday that a gradual increase in estate agents’ stock levels, partly underpinned by rises in borrowing costs and affordability constraints at current prices, is contributing to an orderly slowdown in the market.
And just a week after Bank of England Governor Mervyn King said Britons should be wary of buying a home because of a potential collapse in prices, the Centre for Economics and Business Research said the UK housing market is close to its peak, but prices will not, as some predict, crash by 20-40 per cent.
The think-tank sees house-price inflation dipping from 22.4 per cent last year to 15.2 per cent this year, before slowing sharply to 3.5 per cent in 2005. The subsequent two years could see prices fall, by 1.5 per cent in 2006 and 2.3 per cent in 2007, before picking up again in 2008.
The only places where prices will fall, says the CEBR, are the North East of England, Scotland and Wales, and in these regions values will only see a drop of 10 per cent by 2008.
However, the researchers predict prices in London will keep rising and say that values here will be higher in 2008 than in 2004.
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