The UK property market will slow in 2006 but will not crash, according to an economic research group
The Centre for Economics and Business Research (CEBR) forecast house prices would rise by 4.4% in 2006, compared to 5.1% growth in 2005.
Last year's interest rate cut will support the market in early 2006 but later in the year a slowing economy will hit house prices, the group predicted.
But a crash will not happen as housing demand exceeds supply.
The CEBR's forecast is roughly in line with those issued by banks and building societies.
Halifax and Nationwide both said prices would rise by 3% during 2006.
But market sceptics have predicted a small fall in house prices in 2006, as a prelude to bigger drops in 2007 and 2008.
But the majority of forecasters agree that the first half of 2006 will probably see renewed strength in the housing market but that this will start to evaporate later in the year.
"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, explained.
"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," Mr Said added.
Longer term, though, the group noted that house prices will be supported by demand for property continuing to outstrip supply.
Reporting by the BBC
Comment:
I think that most readers of this newsletter and certainly anyone who has attended one of our property investment courses will already be aware that I have consistently argued against a property market crash in the UK. An article I wrote for Property Investor News this time last year highlighted the reasons why I did not think we would fall off the cliff.
"Strong employment underpins property markets whilst high unemployment, such as in Germany, has a negative effect (the Berlin property market has been in decline since 1997). Employment in the UK is at 20-year highs, real (inflation adjusted) incomes are growing at about 5%p.a and GDP growth is strong at +2.8% - providing little evidence to suggest that a massive crash is imminent."
Clearly the economic outlook is not as rosy as it was when I put the original piece together, but we are certainly not looking at a doomsday scenario.
For the latest economic numbers click below:
If you wish to read the original article, then look at:
"Economics in Property Investment"
"Independent" advice, tips and latest hotspot investment offers
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"The price of greatness is responsibility." Sir Winston Churchill
I am a great believer in taking responsibility for your own past, present and future. Those extremely successful people that I have the pleasure to know have acheived success by being determined to push the boundaries to make their vision a reality.
They knew that success or failure in achieving their goals was their responsibility.
Not
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Just down to themselves and their "will to win." To steal a popular motto, "Who Dares Wins"
Whilst others meander and move at the pace of a snail, visionaries push on and punch through challenges on their way to success. Failure is not in the dictionary and the outcome is always certain.
But, we can't all be successful, can we?
Nonsense and utter rubbish and the sort of comment which belongs in the dustbin. We can all be successful but in order to achieve, YOU must make the first move.
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Just a thought,
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