The future of UK house prices

Tuesday, 03 January 2006 12:00

After soaring house prices since the start of the Millennium, 2005 saw the property market stall - MyFinances asks some of the sharpest minds in the industry: "What next for UK house prices?"

Since 1998 house prices have doubled, rising by 17 per cent in 2002, 15.7 per cent in 2003, and 11.8 per cent in 2004, according to the Office of the Deputy Prime Minister.

However, the Bank of England took action in late 2003 and 2004 to arrest inflation and raised interest rates to three-year highs. This effectively added over £1,000 to average mortgage payments.

Over the following months the property market collapsed, but rather than a price crash - people just stopped buying and selling.

There was a 30 per cent drop in the number of houses changing hands, while prices did stalled.

By the end of 2005 house prices in the UK had increased less than four per cent in a year, and the market was starting to recover.

Now, with confidence in the property market returning, and interest rates falling, MyFinances has asked some of the UK property market's leading lights what will happen to UK house prices in 2006.

Sarah Beeny: Property investment in 2006
Sarah Beeny explains how to make money from property development in a stagnant market.

'Get ready for a flat and boring market'
Jonathan Said, economist at the centre for economics and business research, predicts 2006 will be a year of consolidation for UK house prices.

'Benign economy to support property market'
Fionnuala Earley, Nationwide Building Society group economist, has predicted modest house price rises as favourable economic conditions support a recovering market.

'House prices are overvalued, but by how much?'
Alun Powell, senior economist at HSBC, has said that house prices are still overvalued, but will grow slightly in 2006 nonetheless.

'Good end to 2005 is not a precursor to a fresh surge in house prices'
Mike Coogan, director general of the CML, predicts house prices will rise two per cent next year.

2005 - The year the housing boom ended
It had been long predicted, but 2005 finally witnessed the end of a nine-year boom in house prices.

Choosing a mortgage
The UK has one of the most competitive mortgage markets in the world, but with so many companies and products, securing a mortgage can be a confusing.

Picking a property hotspot
Even in a flagging property market, there are still big gains to be made by choosing the right area to invest in.

Buying a house
Buying a house is no small commitment, and as such there are some basic rules that anyone thinking about purchasing a property should hold fast to.

Selling a house
The key to selling a house, especially in the current stagnating market, is understanding how others will see it and how this is different from your impressions.

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