UK NEWS

PROPERTY PRICES TO STAY FLAT NEXT YEAR

As much as £1,656 has been knocked off the average house price

Monday November 19,2007

By Sarah O’Grady, Property Correspondent

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HOUSE prices are set to “flatline” next year as higher interest rates and the credit crunch take their toll on the property market.

As much as £1,656 has already been knocked off the average cost of a home as the early onset of the winter sales slump forces home owners to drop their asking prices.

The 0.7 per cent decrease – during the four weeks to November 10 – leaves the average value of a three-bedroom semi in England and Wales at £239,986, according to property website Rightmove.

The drop is part of a volatile pattern in the housing market during the past four months.

The cost of a home rose by 2.7 per cent and 0.6 per cent during two months but fell 2.6 per cent and 0.7 per cent the next two months, effectively leaving prices unchanged since July.

But, while prices are expected to remain flat through most of 2008 there are no signs of a housing crash and there could even be some price gains later in the year.

Miles Shipside, commercial director of Rightmove, said: “A major price correction remains unlikely as long as the economy avoids recession.

“This is because the market will be underpinned by demand continuing to outstrip supply.”

In the four weeks to November 10, prices fell in all regions of England and Wales except London where the average cost of a home rose 2.3 per cent.

The West Midlands saw the biggest fall of 2.4 per cent.

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