ISSUE 8/06

Is it? Isn’t it? Has it? Will it?

Double-digit house price rises, record numbers of people moving, property hot spots appearing up and down the land – do not expect any of those in 2006, say the experts.

The Nationwide and Halifax house price indices, both essential monthly reading for the Bank of England's Monetary Policy Committee, are not giving precise predictions but do not expect significant changes after the late 2005 slowdown.

Fionnuala Earley, Nationwide's group economist, says: “Affordability and overall debt levels must ease further before there is any widespread increase in demand for homes and thus prices.”

Martin Ellis, the Halifax economist, says the underlying strength of the UK economy will protect the market against sharp falls, but says it may take another year for first time buyers to re-enter the market in sufficient numbers to push prices higher.

Savills and Knight Frank are the leading estate agents in the forecasting field and they tell a similar story.

Savills, for example, says London and the rest of southern England will see rises of up to 5% in 2006 while those regions which stormed ahead in the past three years - chiefly northern England and Wales - will have falls of a similar level.

The overall prediction for the UK is therefore no change in 2006 but Savills says prime central London (the West End, Notting Hill and the City) will do much better. This may be the start of another cycle of price rises that will ripple out and see all regions of the UK returning to positive growth by late 2007.

Knight Frank agrees that the picture will vary across regions - London and the south east will again be the big winners, it says, along with East Anglia - but the firm gives a rosier overall prediction of mainstream prices. It says they will rise 2.5% across the country, with top-end country houses rising 4% and prime central London up 7%.

After the worries of 2005 with its near-constant fears of a market crash, a quiet year may be exactly what we need. By all accounts, it is exactly what we are going to get.