Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Home owners confident of higher prices

Katherine Griffiths
Friday 27 December 2002 01:00 GMT
Comments

Home owners who have seen their properties shoot up in value in the last few years can expect another bumper 12 months in 2003, despite predictions that the market is set to slow, says a survey by the mortgage lenders Woolwich.

Some 53 per cent of people surveyed believed the housing boom would continue next year, with 19 per cent expecting further double-digit growth, Woolwich, part of Barclays bank, found.

Nearly a third expected property prices to stay the same. Only 15 per cent thought they would fall during the next 12 months, with 4 per cent predicting prices would dive by more than 10 per cent.

Confidence was high across all regions, but people living in London and Wales were most hopeful that the boom would continue, with 56 per cent expecting further significant price rises despite economists' warnings that prices could fall slightly in the capital next year.

People were least optimistic in the Midlands, where just 48 per cent expected the cost of property to continue increasing.

Confidence in the housing market is down slightly from the start of 2002. At the beginning of the year 58 per cent of consumers predicted house prices would rise, peaking at 69 per cent in May and averaging 63 per cent for the whole year.

During 2002 those living in the South-west of England, which has seen some of the strongest house price rises, were the most confident with an average of 69 per cent expecting further rises, while those in the North-east were the least confident at 58 per cent.

Woolwich predicts that house price inflation will gradually slow to about 4 per cent during 2003, and forecasts interest rates will rise by 0.75 per cent to 4.75 per cent, increasing the cost of borrowing.

Andy Gray, head of mortgages at Woolwich, said: "We believe that the house purchase market will slow gradually, whilst more existing homeowners will seek to remortgage to reduce their outgoings as weaker earnings growth, lower bonus payments, higher household taxes and interest rate rises work through.

"It's crucial that home buyers look beyond short-term gains based on rapid house price inflation as this could intensify speculation regarding runaway house prices, which could eventually lead to a dramatic correction."

People's bullish attitude to the housing market reflects the fact that prices have risen by an average of 30 per cent this year. But economists believe next year will see a much more modest increase of 9 or 10 per cent.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in