Housing boom to wane early 2007 says survey

Posted: 16 Nov 2006 10:54:20 GMT

The housing boom of the last year will persist through to the early part of 2007 before weakening due to affordability issues and the cost of borrowing, a Reuters poll has said

The housing boom of the last year will persist through to the early part of 2007 before weakening due to affordability issues and the cost of borrowing, a Reuters poll has said.

The survey of 32 economists and leading property analysts said that annual property price growth will fall to five per cent over the course of 2007.

Most respondents to the poll said that policy setters were worried that spiralling house prices risk a sharp correction, threatening economic growth.

"November's rate rise has pushed affordability beyond a comfort zone," said Kelvin Davidson of Capital Economics.

"Interest rates are the uncertainty at the moment. So far the market has been pretty immune to rate rises but there is no guarantee that will continue."

Almost two-thirds of the experts polled said that they believed that UK property is overpriced, but that this would be corrected by slower growth and not a slump.

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