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| House prices 'face 2008 slowdown' | |
| (30 minutes later) | |
| House price growth is set to stall next year as the market witnesses a "significant slowdown", building society Nationwide has warned. | House price growth is set to stall next year as the market witnesses a "significant slowdown", building society Nationwide has warned. |
| It predicts that annual house price inflation in the UK will slump from its current level of 9.7% to 0% by this time next year. | It predicts that annual house price inflation in the UK will slump from its current level of 9.7% to 0% by this time next year. |
| Nationwide blames a slower economy, stretched affordability, tighter credit conditions and lower buy-to-let demand. | Nationwide blames a slower economy, stretched affordability, tighter credit conditions and lower buy-to-let demand. |
| Almost all surveys suggest the market has been cooling since the summer. | Almost all surveys suggest the market has been cooling since the summer. |
| Loss of 'momentum' | |
| The building society expects there will be a large regional variation in house price growth in the coming twelve months. | The building society expects there will be a large regional variation in house price growth in the coming twelve months. |
| As we move into 2008, economic tailwinds are increasingly being replaced by headwinds Fionnuala Earley, chief economist, Nationwide | |
| Scotland is forecast to do best with prices rising by 4%. In Northern Ireland, which has been enjoying "phenomenal" price growth of 40% plus year-on-year, Nationwide believes prices will fall by 5%. | |
| Fionnuala Earley, Nationwide's chief economist, said the "momentum" that had kept prices strong in 2007 was now fading. | |
| "A slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations appear likely to reduce the level of activity," she explained. | |
| "As we move into 2008, economic tailwinds are increasingly being replaced by headwinds," she added. | |
| 'Significant slowdown' | |
| Nationwide is also predicting a cooling in the buy-to-let market. | |
| "Poor yields, lower house-price expectations and tighter credit conditions are all likely to take some froth out of buy-to-let and limit its contribution to price growth," said Ms Earley. | |
| But Nationwide believes recent fears predicting a "mass exodus" from the sector appear "overdone". | |
| On Thursday, in its latest quarterly inflation report, the Bank of England also warned of a number of risks to the UK economy next year. | |
| Analysts argue that the Banks comments may point to a lowering of interest rates in coming months. | |
| Nationwide believes that further interest rate cuts - added to the continuing lack of housing supply - could provide "some support" to price growth but are unlikely to prevent a "significant slowdown". | |
| Expert views | |
| The building society is the latest group to publish its house price predictions for 2008. | |
| Property website Hometrack and the Council of Mortgage Lenders have both forecast that prices will rise by 1%. Capital Economics believes prices will fall by 3% during both 2008 and 2009. |