UK House Prices Situation at 20 7 2007: Fairly stable, little change in most areas

UK House Prices Forecast: Minimal growth for the rest of 2007

House Prices Likely To Fall In Real Terms in 2008 - CML

The trade body representing more than 95% of UK mortgage lenders has forecast that house prices are likely to rise no more than 2% - 3% in 2008 - the weakest growth in thirteen years.

Further evidence of poor affordability comes from the first-time buyer market - CML figures show that roughly 35% of mortgages were taken by first-time buyers in the first quarter of 2007 - a big drop from the long-term average of 50%.

The Council of Mortgage Lenders believes that the combination of higher interest and high prices will put the squeeze on homeowners' finances. Michael Coogan, director-general of the CML, said, "I don't believe there will be a crash, but clearly a slowdown is more likely in an environment of higher interest rates."

If house price inflation falls below general inflation, property values will fall in real terms, leading to the gentle slowdown in property prices that so many experts believe is inevitable and necessary.

UK Property 20% Overvalued - Bank of America

New research by the Bank of America has concluded that UK property is overvalued by approximately 20% at present.

The bank believes there are signs that the market is peaking and forecasts a 20% chance of a significant price adjustment - a crash - sometime in 2008/9.

Matthew Sharratt, an analyst for the bank commented that:

"Leading indicators and our own econometric work point to a significant slowdown in the UK housing market later on this year and into next…"

The bank's view is that UK house price inflation will remain very subdued until 2010, as buyers across the UK are affected by poor affordability.