It has been forecast by the Centre for Economic and Business Research that house price increases next year will start to moderate and stabilise after a series of increases over recent months.

However, the CEBR has stated that the UK could still see house prices increase by between 2 and 4 percent next year. This is not an opinion that is mirrored by all industry groups and officials, as some have predicted that house prices will begin to fall again next year and could continue to do so over the course of the year.

Whilst there are some industry officials and groups that have said that there is a strong likelihood of house price falls over the coming year officials from the CEBR have said that this scenario is unlikely and has cited a number of reasons for this. The centre said that mortgage lending would start to improve on a gradual basis, as financial institutions began to slowly balance their sheets and become more confident and able to lend again.

The group went on to state that the cost of mortgages should also remain fairly low if the Bank of England keeps the base rate at its current all time low of 0.5 percent, as many expect it to do for some time.

This could improve affordability for both existing mortgage holders as well as new borrowers, although the deposit levels and mortgage lending restrictions in place from many lenders could make things more difficult for some buyers.

The biggest victim of the credit crunch, according to the CEBR, was the house building sector, which is said to have seen housing completions fall by around 18 percent in 2008 and expectations that they will fall by around another 19 percent in 2009.

Leave a comment