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06 September 2008 06:51 BST

House prices – up or down in 2008?

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It’s no secret that over the last decade a lot of people have made a very healthy amount of money out of property investment. Average house prices have soared by over 180 per cent in ten years, and they now stand around the £200,000 mark, if you average out a variety of sources such as Halifax and Nationwide. In fact, property has performed so well that, according to the BBC, 53 per cent of people now view it as a safer investment than cash, even though cash is incredibly safe.

Such a belief, however, may be dealt a cruel blow this year as analysts talk widely about a slowdown, and possibly a crash. Respected economists Julian Le Grand and John Van Reed, both of the London School of Economics, have said that they prices could fall by 30 per cent and 20 per cent respectively. Meanwhile, Jonathan Davis of Housepricecrash.co.uk has stated that house prices a going to be cumulative fall from 2007 onwards, and yearly predictions are at a huge 35 per cent drop off.

Despite such doom laden predictions for home owners, the skies seem to be less grey for many other analysts. The majority think that house prices are most likely going to be flat for the year, possibly below the current inflation rate of 2.2 per cent, which means a slight decrease in real terms. Some of the reasons for this are as follows:

Strong GDP, which has now overtaken USA.
Economy continuing a record period of unbroken growth.
Likelihood of further interest rate cuts.
Employment continues to rise.

It is also clear the location will continue to be one of the clearest dividers in housing valuation, and if you buy into the right area your house price is less likely to be effected by a stemming in growth or a possible downturn. Liam Bailey, head of research at Knight Frank estate agents, spoke to The Times about areas where it may be possible to see sustained growth over the coming year. The cities of Oxford, York, Cambridge and Milton Keynes all featured highly as places that continue to sustain strong demand and growth prospects from a range of factors.

If you’re looking to buy, consider things like the potential for regeneration and transport links. With the opening of the St. Pancreas high speed rail link the area around Kings Cross, Central London, has seen a significant amount of regeneration and house prices climbs. Commutable distances from the Olympic site, in Stratford, London, are also likely to see continued growth up until 2012, even if the rest of the market does see a slow down.

Take a look at Natwest mortgages if you’re looking to buy or remortgaging in the coming year, they have an excellent range to suit a wide range of customers. Meanwhile, uSwitch has stated that homeowners could save up to £500 a year if they switched to the top five financial products on the market. ASDA Finance can provide a range of useful personal finance products for you with a panel of providers, from secured loans to home insurance. End of story

Associate Article

House prices – up or down in 2008?

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