UK House Prices Situation at 6 4 2007: Stable in most areas, growth in London & SE

UK House Prices Forecast: Growth continuing to slow, but prices not falling in short term.

Yet another report suggests that house prices are far too high for incomes – but this time it is from the only organisation who correctly predicted house price growth last year – should we take notice?

Lombard Street Research Predict Falls in 2008

In 2006, only Lombard Street Research, an independent economic research body, correctly predicted the rate at which UK house prices would grow. Lombard has just published their latest UK Housing Affordability report, in conjunction with the Daily Telegraph. It reveals that affordability, a measure which compares house prices and mortgage costs with incomes, has plunged 7% in the last 12 months.

Lombard's affordability barometer measure is now at 91.2 points, the lowest level since 1991. Discussing the report, Diana Choyleva of LSR said that, "We are now clearly at the end of the house price boom. We think there will be a correction next year, although it is unlikely to be as severe as the last crash."

Although the affordability barometer fell much lower in the last housing crash, Lombard's concerns and their historical accuracy suggests this could be a warning we should take heed of.

Introduction Of HIPs To Help Stabilise Market?

With the introduction of the government's controversial Home Information Packs less than two months away, some estate agents around the UK are predicting a last minute surge of properties being placed on the market as sellers seek to avoid the estimated £450 fee for a HIP.

Some agents are even predicting that the glut of properties suddenly on the market will help stabilise prices, reducing unsatisfied demand for housing and hence dampening price growth.

While the reality is likely to be a little less dramatic, there is no doubt it will take buyers and sellers some time to become comfortable and familiar with HIPs, and concerns remain over whether buyers will trust the information in sellers' HIPs, or whether they will still wish to perform some checks and searches themselves.