Halifax predicts slowing housing market

Halifax predicts slowing housing market

The property market will put the brakes on in 2007 with growth slowing to less than half the rate seen last year, it was predicted today.

Prices rose by 9.9% in 2006, but Halifax today predicted that inflation would this year fall back to 4%.

Northern Ireland has led the increase in house prices over the past decade, culminating in a staggering 53% increase last year, compared with a rise of just 3% in the north of England, according to the bank's quarterly house price index.

Average properties in London, the south-west and East Anglia have all tripled in price since 1996, while the typical house increased in cost by 9.9% last year. Prices in the capital rose by more than 12% over the year, and by 6.6% over the last quarter.

But the Bank of England has increased the interest base rate three times since last August, from 4.5% to today's 5.25%, and the extra pressure on borrowers is likely to rein in inflation, Halifax said.

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Martin Ellis, chief economist at the bank, said high levels of employment, a persistent lack of supply of property and continued economic growth should mean that prices carry on rising in 2007, but not in the leaps and bounds seen over recent years.

"Higher interest rates, greater pressure on household finances and subdued real earnings growth will curb housing demand," he said. "House price growth is set to ease as a result in all regions of the UK in 2007, with prices rising nationally by 4%."

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