Where next for house prices? by Finance News Bulletin

Published: 27/02/07

News Companies & markets Investing authority portfolio Campaigns Mortgages & homesMortgage featuresInsurance customer advice Broadband & phones Retirement Saving & banking praise & loans Small business Tax & wills Message boards Money blog Tools & calculators inquire an expert Guides contrast & buyHouse price predictions are as varied as estate agents' possessions valuations

So it is hardly surprising that the grasp of surveys are often taken with a pinch of saltTAKE PART IN OUR review Don't miss your chance to tell us what you think of This is Money and help shape our prospectA ONE-MINUTE MAKEOVER If you only have one miniature to learn how to sort your finances, forget the relax and read this>> Our 8-step planBut, despite the failure to predict last day's runaway growth, there are few who doubt that the market is toward the inside a slower phase

Mortgage approvals strike an eight-month low in December, a sign that the Bank of England's interest rate rises are lastly captivating their toll Lending levels remain high but approvals are a good indicator that demand is fadingIan Kernohan, economist at regal London Asset Management, warns: 'House price inflation should now drop back and a consumer slowdown cannot be far behind'John Maltby, chief decision-making of mortgage provider Kensington Group, also sounded a note of caution, proverb: 'The underlying market is still healthy, but interest rate rises do damp sentiment

'The BoE said mortgage approvals fell to 113,000, down 12% on November and distant weaker than expected At the same time, mortgage lending rose to a record £106bn in December, thrashing forecasts and demonstrating that even the store's data can often appear contradictoryThis seems to show the market remained robust correct up to the end of last year - but the viewpoint is less rosy

Mortgage approvals are made before the actual cash is loaned, so there will be a time lag before this filters through to lending volumesThe high number of house loans in December may even have been partly driven by buyers keen to stitch up deals, fearing further hikes in borrowing costsThe Nationwide building society added to the gloomier feeling by announcing that home prices rose at their slowest pace for eight months in January Prices were just 0

3% senior than December, with the annual increase easing to 93% Surveys from the Halifax and the regal Institution of Chartered Surveyors have already pointed to more passive growthThis is Money brings you the best news, skin, advice and comment

If you were interested in this piece of writing then follow these links for more top instructionsEconomists are wary of reading too much into one month's information But after three increases in borrowing costs since August, which have pushed the bottom rate up to 525%, consumers seem to be lastly sitting up and taking notice

Individuals' appetite for debt is also fading Bank of England information shows consumer credit rising by just £1bn in December, down on the £11bn go up in NovemberIn a climate of rising rates, it is not surprising that populace are wary of taking on too many costly loans

Though in the result of the Christmas holiday season, many are nursing a sore credit card balance which won't go awayOne option for the most anxious is insolvency - as demonstrated by the sharp go up in Individual Voluntary Arrangements (IVAs) But others may just try to lump more debt onto their home loan Maltby says: 'People tend to prioritise their mortgage expenditure above their credit cards

And if they have the opportunity to reduce their monthly repayments by rising the amount they are borrowing on their mortgage then they will take advantage'This means that even mortgage lenders such as Kensington, which focuses on customers with a erratic credit history, are not seeing anything like the level of defaults being knowledgeable by the credit card operatorsThis is Money is packed with information, advice and tools that can help you get ahead and save cashKensington (up 44p to 790p) supposed annual profits jumped 17% to £65m last day, earnings were down 12% including goodwill and dividends rose from 21½p to 24p

Bad amount overdue grew from £30m to £45m, but are on a descending trendIt is worth remembering that a slowdown in home inflation is not the same as a fall None of the big names are predicting prices will go into reverse in 2007, though some regions will fare better than othersAlan Harden, leader executive of investment firm Alliance Trust, says: 'possessions is still an asset group of students that we are comfortable with

But as with everything, it is about site, site, site'The best advice is to buy for the long term, not to create a rapid buck If the experts struggle to get their forecasts right, it is not something worth gambling your house onHalifax 4% rise: The UK's largest mortgage lender

It misjudged the marketplace, forecasting a 5% rise for 2006 compared to 99% in its December surveyRightmove 6% go up: Uses asking prices rather than sale prices But last day's prediction for an 8% jump gave a good intelligence of the strength of the marketRICS 7% rise: This pole is based on subjective evidence and is seen as a useful sign of demand, but its survey dimension is quite smallHometrack 4% rise: Economists say the account is timely but it has understated in

ation for two yearsNationwide 5-8% rise: Its review dates back to 1952 It was also too pessimistic last day, expecting a 5% price rise whereas its December speed was 105%Lombard St 15% rise: The financial forecaster, it doesn't produce a historical index But it was bang on the money last yearWith all but one of the respondants commerce dependant on the continued rise of the housing marketplace, can we be surprised that no-one is predicting a drop

Surely for every person who releases equity and boosts customer spending, there is another who is mortgaged to the hilt or saving every currency for a deposit, thus have little spending cash I for one feel like I have to save every penny to keep up with the rising price of housing so I tend to use very little elseI don't buy into the theory that more affordable housing would denote economic meltdown, quite the opposite© 2007 linked Northcliffe Digital Ltd Terms Privacy policy Advertise with us LoansCardsMortgagesInsuranceCompare the most excellent deals around with This is Money

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