House price freeze predicted
26 April 2004
House prices in five years' time will be roughly the same as they are today, according to a leading financial expert.
Merrill Lynch chief European economist, Ian Stewart, told a conference on the housing market that prices could start to dip from next year.
Speaking at event arranged by the investment bank, Mr Stewart rejected recent predictions of a housing market crash and suggested that prices were likely to rise by 12.5 per cent this year, The Daily Telegraph reports.
"Current rates are unsustainable but they will peter out rather than collapse," he said. "Debt is at record levels but so is household wealth. You need to watch both sides of the balance sheet.
"My guess is that in five years prices will end up where they are at the moment. After that they are unlikely to rise much more than in line with earnings - around two per cent."
James Crosby, chief executive of the country's biggest mortgage lender HBOS, told the audience that the market "still has very firm foundations" and dismissed that a housing market crash was imminent.
"You would struggle to find a single indicator suggesting anything other than the market is in rude health," he added.