CEBR sees growth slowing but no housing crash
House prices are set for a year of slower growth in 2006 but will avoid a crash, a leading economic think-tank forecast today.
The Centre for Economics and Business Research expects prices to rise by 4.4% in 2006, compared with 5.1% growth in 2005.
The dip in interest rates at the end of last year should keep the market reasonably buoyant in the early part of the year, but weakness in the UK economy could slow growth from the summer onwards.
Demand continuing to outstrip supply will stop the market crashing, the think-tank said.
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"We expect activity in the housing market to remain buoyant through the first half of 2006 supported by a relatively benign macroeconomic environment," Jonathan Said, economist at the CEBR, told reporters.
"But the market may weaken in 2007. A slowdown in the US housing market will threaten world economic growth next year; this will have a knock-on effect here in the United Kingdom, and we expect this will take a further edge off our property market," he added.
Halifax and Nationwide are both predicting prices will rise by 3% in 2006.
