House prices to rise 7% in 2007

Posted: 12 Dec 2006 11:29:01 GMT

The Royal Institution of Chartered Surveyors (RICS) has predicted that house prices will rise by seven per cent in 2007 and first-time buyers will find the step on to the first rung of the property ladder even harder

The Royal Institution of Chartered Surveyors (RICS) has predicted that house prices will rise by seven per cent in 2007 and first-time buyers will find the step on to the first rung of the property ladder even harder.

RICS said house price growth to slow slightly in 2007, but activity will remain high with demand outstripping supply, but it added that a further interest rate rise to 5.25 per cent is likely in the coming months and will help cool the market in the New Year.

The predictions were bad news for first-time buyers as RICS said a slowdown in the housing market will not aid affordability or accessibility for first-time buyers as prices continue to outstrip incomes.

"The strength of the market this year has been surprising. Indications are the market will retain significant momentum through the first half of 2007 due to solid economic growth and rising employment," said RICS economist David Stubbs.

"The bleak outlook for first-time buyers looks set to darken further as house prices rise faster than incomes and the government holds the stamp duty threshold at £125,000.

"Increasing gloom for those trying to get on the property ladder won't have significant impact on the housing market as demand remains strong, disposable income is growing and buy-to-let investors substitute for first time buyers at the bottom end of the market."


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