2008 will not herald major price falls

Posted: 28 Dec 2007 13:33:45 GMT

Predictions of doom and gloom in 2008 are wide of the mark, according to one expert.

Predictions of doom and gloom in 2008 are wide of the mark, according to one expert.

Following the publication of the latest Nationwide House Price Index, many commentators have forecast major house price corrections in the new year.

The index revealed that house prices fell by 0.5 per cent month-on-month but Howard Archer from Global Insight does not anticipate a major correction.

"The downside for house prices is expected to be limited by a combination of factors -in particular, these include a lack of supply, the increasing number of households, high employment and the fact that few vendors are currently having to sell for 'distressed' reasons," he said.

"Furthermore, we expect the Bank of England to cut interest rates by a further 75 basis points in 2008, following December's 25 basis point cut," added the economist.

The Bank of England cut the base rate of interest in December for the first time in over two years.

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