| UK
House Prices Situation at 2 11 2007: Fairly static in
most areas.
UK
House Prices Forecast: Softening more likely than a crash.
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Group of Economists Don't Expect Housing Crash
The
Ernst & Young Item Club, a group of leading economists,
expects the housing market to have a
soft landing, rather than a major crash.
In
its latest report, published this week, the Item Club
forecast reduced economic growth for 2008, mostly due
to tightening credit conditions. It does not, however,
expect to see a US-style housing crash.
The
report comments that "Item does not believe that
the tighter lending conditions, caused by the worldwide
squeeze on credit, will lead to a serious correction in
house prices."
However,
the short-term forecast for the housing market is still
fairly weak. Item Club chief economic advisor Peter Spencer
explained that:
"Activity
is likely to fall and prices may stall through 2008. But
as interest rates come down and new supply remains restricted,
the foundations will be laid for renewed real price
growth in the long run."
Nationwide
Adjust House Price Forecast for 2008 to 0%
Nationwide
building society is to downgrade its forecast for
house price growth. The lender, Britain's biggest
building society, was previously forecasting growth of
3-4% in 2008.
It
will now be reducing that forecast to 0% - with "falls
on an annual basis in some areas", according to Fionnuala
Earley, Nationwide's group economist.
Earley
believes there may now be a "few years" of flat
growth in the housing market, as a result of tightening
credit conditions and slower economic growth.
Mortgage
Approvals Down - British Bankers Association
The
British Bankers Association (BBA) has reported a decline
in mortgage approvals amongst its members. September saw
a 14% fall in mortgage approvals from August, and a 27%
reduction compared to September 2006.
The
BBA commented that this September saw the smallest number
of approvals for any September since 2000.
Mortgage
approvals are generally considered an important indicator
of housing market activity, and a significant
decline in approvals usually comes before a fall in house
prices.
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