House prices were unchanged in January and the market is likely to be flat for the rest of 2008, the Halifax has reported, with higher utility, petrol and food costs squeezing demand.
The continuing problems in global financial markets have also restricted the amount of lending in the economy, making it hard for some would-be homebuyers to borrow enough money.
But Martin Ellis, chief economist at the Halifax, said the bank did not believe a general property market crash was in the offing. "We expect sound economic fundamentals and lower interest rates to support house prices. Nationally, we predict that house prices will be flat in 2008."
Mr Ellis added that he expected the Bank of England to cut rates at least twice before the end of the year.
Overall, the Halifax reported that average UK house prices have risen by 4.5 per cent during the past year, compared to December's figure of 5.2 per cent – reflecting yet again the slowing of the market.
The Halifax's findings are bang in line with the other major house price indices from Nationwide building society, the Land Registry and property website Hometrack. These have all shown that prices ground to a halt in the final quarter of 2007 and there have been no signs of life since.Reuse content