Halifax: House prices to remain stuck in the doldrums in 2012

Published 12th Dec 2011

House prices will remain stuck in the doldrums but avoid a dramatic fall next year, according to the Halifax’s 2012 property prediction.

The forecast said that house prices will remain within a range of down two per cent to up two per cent next year.

Halifax, which compiles a long-running monthly benchmark house price index from its mass of mortgage data, said the Bank of England bank rate will remain rooted at 0.5 per cent throughout the year ahead, propping up the housing market.

But it warned that ‘the outlook for both the economy and house prices is particularly uncertain’.

Halifax's housing economist, Martin Ellis, said: ‘The housing market has proved highly resilient in recent months despite the weak economic recovery and the significant deterioration in the outlook for both the UK and global economies.

‘House sales and the supply of properties on the market for sale have remained very stable since late 2010. These steady market conditions have helped to stabilise house prices and sales. As a result, the average price is currently little changed from that at the end of last year.

‘This resilience in the face of very challenging economic conditions provides encouragement regarding the prospects for next year. Overall, we expect continuing broad stability in house prices nationally during 2012. Prices are again likely to end the year at levels close to where they begin with the market continuing to lack any real direction.’

Halifax forecast house prices to remain flat over the course of 2011, and with its index covering the year to November showing prices down 0.8 per cent since January and 1% over twelve months, this looks likely to be broadly correct.

Headline property prices have continued to defy gravity throughout the past year, with most major indices showing only small overall declines despite the threat of a double-dip recession, the debt crisis in the eurozone, rising unemployment and declining personal finances.

Nationwide Building Society, which also produces a mortgage data-based benchmark index, actually showed prices rising in the year to November – with a 1.6 per cent annual increase putting property in the black annually for the first time this year.

Land Registry figures based on sales values throughout England and Wales paint a different picture and show prices down 3.2 per cent in the year to October, the most recently available month.

But the headline statistics do not paint a full picture of the property market, with transactions running near record low levels, many homes stuck unsold on agents’ books, and a widening North South gap.

Halifax said it expects London and the South East to continue to outperform the rest of the UK, with the stronger economy there and lower dependence on the public sector bolstering prices.

Source: ' ThisIsMoney '

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