| According to a recent survey by market forecasters Halifax and Nationwide (2006), property prices are unlikely to fall sharply this year, but will again fail to match growth in average earnings. The two lenders that produce house price indices expect growth of no more than 3 per cent this year; the consensus among independent economists is that earnings will grow by 4 to 4.5 per cent.
The rise in house prices slowed last year, falling behind the average growth in earnings for the first time in ten years. On Nationwide's measure, the average house price rose 12.7 per cent in 2004, and just 3 per cent in 2005. |
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Although most economists agree that the housing market is overvalued, they have disagreed over the past few years about how the problem will resolve itself. The mainstream prediction has been that runaway house price inflation will gradually slow to zero, or very close to it, and that the market will spend the next few years moving sideways until earnings catch up with prices.
Levels and bases of, and reliefs from, taxation are subject to change. |
