Halifax predicts UK house prices will be stable in 2012

Monday, 12 December 2011 04:27

Halifax has released a forecast for the UK housing market for 2012 that predicts there will be little change to house prices in 2012.

The forecast expects house prices to remain broadly stable, rising or falling by no more than two per cent either way as the slump that many people fear will not materialise, according to the Halifax.

Hose prices are at an average of £161,731 at this time, little changed from the end of 2010 and they are not expected to deviate substantially from that figure over the next 12 months.

This is despite most leading economists predicting that the UK will enter recession in the first part of 2012 and that the eurozone and other areas of the global economy are likely to follow suit.

The Halifax predicts regional differences with London and the south-east remaining strong and the north/south divide set to increase.

The Halifax predicts possible difficulties for households in accessing mortgage funding and that unemployment will increase. However, the Bank of England is expected to maintain base rate at 0.5 per cent for the whole of 2012 which will help householders continue to be able to afford repayments and increase their debt levels by encouraging people to pay down their mortgages.

The continued imbalance between supply and demand of new homes is also expected to keep the value of UK homes at a stable level.

Halifax's housing economist, Martin Ellis said: “House sales and the supply of properties on the market for sale have remained very stable since late 2010. These steady market conditions have helped to stabilise house prices and sales. As a result, the average price is currently little changed from that at the end of last year.”

If you are able to get a mortgage the rate of mortgage affordability is at its lowest level since 1997, with just 26 per cent of disposable earnings required for mortgage repayments in the third quarter of this year, compared to the long term average of 37 per cent over the past 25 years and 48 per cent of disposable earnings as recently as 2007.

"The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future is likely to continue to support the market over the coming 12 months, Mr Ellis added.

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