Research recently conducted by Lombard Street Research has indicated that due to the rise in the base interest rate, and therefore the rise in mortgage rates, the housing boom will come to an end in 2008.
The research company predicts that if house prices keep rising they will be unaffordable by the end of the year and that any action taken to correct this should be a balance between the slowdown of 2005 but not as drastic as the price crash of the early 1990’s.
Our view
We are doubtful of any correction occurring and we predict a rise in house prices of around 4per cent for 2007 and to rise in line with the average earnings in 2008. Property will remain stable and the preferred investment for many.