High price growth to continue into 2008 says CML

Posted: 18 Dec 2006 10:47:11 GMT

House price growth is likely to continue unabated over the next two years, but the number of actual sales is likely to decline in 2008, says a new market forecast

House price growth is likely to continue unabated over the next two years, but the number of actual sales is likely to decline in 2008, says a new market forecast.

The fall in transactions will follow a slight increase in 2007 and will be related to affordability problems, said the Council of Mortgage Lenders (CML).

Price growth is expected to hit seven per cent in 2007 before falling back to five per cent in 2008, while sales will reach 1.19 million next year before falling to 1.13 million in 2008.

"The strength of demand relative to supply will remain a structural feature of the housing market for the foreseeable future," said Jim Cunningham of the CML.

"This means that, in the absence of major shocks, house prices are likely to rise above current levels in relation to income.

"But affordability, measured by the size of deposit required and the percentage of income needed to service the mortgage of a new borrower, is stretched."

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