That's quite enough excitement ...

That's quite enough excitement ...

The 2006 housing market is set to be the most stable for many years, with the lowest level of price growth and smallest number of sales for over a decade.

Experts have rarely been so unanimous. Almost all say a soft landing has taken place, so the threat of a crash has been discounted, even by the most pessimistic consultancies.

Now most commentators say there will be modest growth this year: 4 per cent according to property website Rightmove; or 3 per cent (Nationwide); or 2.5 per cent (estate agent Knight Frank). Property consultancy Savills says there will be no overall change at all, although this will mask rises and falls of 5 per cent in the regions.

Most also say that with a temporary shortage of properties on sale during the autumn and winter - created by an unexpected surge of buyers in late 2005 - many areas of Britain will see short-term price rises in the first three months of this year before values fall back slightly when the traditional glut of homes come on sale in the spring.

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With this stable but undramatic prognosis, key market characteristics will be:

1. Fewer people moving

'We expect slow house price growth and the relatively high costs of moving home to act as a further brake on transactions,' says Richard Donnell of property consultancy Hometrack. He expects up to 5 per cent fewer sales in 2006 than last year, which was itself about 10 per cent down on 2004.

Other predictions, from the Council of Mortgage Lenders and some banks and building societies, suggest even more dramatic slumps in the number of movers.

2. A shortage of new homes

New house building remains stubbornly about 30,000 units below the numbers needed to match the growth in households as people live longer and live alone.

'Demand from new households has consistently outstripped supply. This has been a substantial factor in pushing average asking prices towards an all-time high,' says Miles Shipside of website Rightmove, which monitors asking prices.

3.Winners and losers

Jim Ward of Savills says prime areas of central London are the places to watch. He predicts above-average rises this year in Docklands, Notting Hill, the West End and Mayfair. These may seem irrelevant to many people who cannot afford the capital's prices, but they could herald the start of a new cycle of property appreciation across the country.

Liam Bailey at Knight Frank says places with regeneration schemes will also do better than average. He cites Weymouth in Dorset, where there will be infrastructure development ready for the 2012 Olympic sailing events, and Kent's Medway towns, where people will want to live ahead of dramatically improved train services to London in 2009.

But Bailey also warns that city centres with an over-supply of apartments will lose out; 'Because they've done well in the past, city centres will under-perform for the next couple of years - there'll be 0 per cent to 2 per cent price rises at most.'

4. Dwindling buy-to-let

Buy-to-let as an investment activity is now well past its peak. In late 2003 and early 2004 there were up to 100,000 advances to landlords each half-year, but by summer 2005 the level was 58,000. With low or no capital appreciation, rental income barely covering mortgage charges, no chance to put investment properties in Self-Invested Pension Plans and the stock market looking increasingly tempting, the buy-to-let sector will have a tough 2006.

5. Home Information Packs

HIPs become compulsory in mid-2007, although pilot schemes in some of Britain will start this summer.

The packs, to be prepared by sellers and costing £500 each, must include search and survey information. They will almost certainly not have any long-term effect on prices, but estate agents - who are generally fiercely opposed to the packs - will urge owners who are thinking of moving to save money by selling before Christmas.

6. Affordability

'We think it's far too early to say the market has reached a turning point,' cautions Fionnuala Earley, Nationwide's group economist.

She says affordability and overall debt levels must ease further before there is any widespread increase in demand for homes, and warns that the recent surge in demand may just be down to buyers responding to the August interest rate drop and a proliferation of cheap fixed-rate mortgage deals.

Her counterpart at the Halifax, Martin Ellis, agrees: 'The 2005 slowdown in economic growth and the ongoing historically high level of house prices relative to earnings are expected to curb recent improvement in demand and prevent a marked pick-up in prices.'

So the market message this New Year is steady as she goes - although some estate agents still hope for an unexpected bounce.

'Every year since 1997 commentators, economists and analysts have consistently underestimated house-price growth,' says Neil Chegwidden, an economist at estate agency Cluttons. 'So 2006 could see a repeat, given the economic backdrop and emerging trends in consumer confidence.'

Perhaps. But there is nothing wrong with the prospect of a dull year. After high price rises since the Millennium and a period of worry that the housing market would crash, a lengthy spell of consolidation and relative unexcitement may be just what the market needs.

Guardian Unlimited © Guardian Newspapers Limited 2005