2007 will see 7% house price increase
Published On 12 December 2006
House prices will march onwards in 2007 with rises of seven per cent, the latest figures have shown.The new housing market forecast from the Royal Institution of Chartered Surveyors (Rics) has predicted that alongside a seven per cent increase in property prices, 2007 will see a reduction in the affordability and accessibility of houses for first-time buyers.
Although Rics expects a cooling of growth next year, it still feels demand will outstrip supply and that a likely interest rate rise to 5.25 per cent in the coming months will help calm the housing market as we move into the new year.
David Stubbs, Rics economist, said: "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.
"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."
London, the south-east, Scotland and Northern Ireland will all perform above the national average house price increase through next year, Rics concluded.
