FinanceBAM News

On the site of Yahoo Finance of UK ‘Alice Lilley’ highlighted Housing Market Crash. Its analyzed that the year 2006 saw a high rise of 9.9% in house prices until 1%downfall in December of the same year according to the most recent figures from mortgage lender Halifax

The latest Royal Institute of Chartered Surveyors monthly survey reported a sharp drop in the pace of increase in new buyer enquiries in November, suggesting that the market upturn may be losing momentum. But according to most commentators these kind of surveys don’t prove anything in particular. For example, Estate agent Savills is forecasting 7% growth in 2007 on the other hand the mortgage lender Nationwide expects the prices to rise between 5% and 8%.

This will prove the predictions from the Council of Mortgage Lenders(CML) to be true. According to them the prices will rise about 7% in 2007 and 5% in 2008. On the other hand Howard Archer, a chief economist at Global Insight is also predicting a 6% increase in 2007. He said “Ongoing strong mortgage activity and a shortage of supply suggests that house prices could well see further buoyancy in the near term”. However, the Royal Institution of Chartered Surveyors believes prices will climb by just 3% this year, while Halifax is forecasting a 4% rise.

Halifax concluded there results for the year 2006 from the strong growth in areas such as London, where the average price paid for a property hit £287,176 at the end of the year, and the South West, where the average home now costs £200,931

It should be taken into consideration that the bad news for homeowners with variable-rate mortgages, as well as investors and first-time buyers hoping to get a foot on the property ladder in the coming months, is that Halifax expects the Bank of England to raise the base rate by a further 0.25% early this year.

Rates are not predicted to remain at this level for long as continuing subdued earnings growth and slowing domestic and overseas economic activity are expected to bring the base rate back to its current level of 5% by the end of the year.

CML economists Jim Cunningham and Paul Samter said: “The strength of demand relative to supply will remain a structural feature of the housing market for the foreseeable future. This means that, in the absence of major shocks, house prices are likely to rise above current levels in relation to income.