Housing market is safe - for now

25 November 2003
Confidence in the housing market continued to thrive during October, according to new research produced by the Woolwich.

The former building society - now Barclays' mortgage arm - produces a monthly 'confidence balance' for the housing market, which has shown sustained growth since March.

In October, confidence reached 60 per cent - up considerably from the March low of 50 per cent.

The Woolwich has pointed out that its figure mirrors the house price trends for the period: the rate of house price inflation accelerated in October for the first time since the spring.

The figures predict sustained house price growth for 2004.

The Woolwich's message comes just a day after property group Hometrack released figures on Monday showing that the average national increase in value has been 1.1 per cent for 2003.

However, it is not all good news for homeowners in the longer term.

George Johns, economist for The Woolwich warned, 'The argument that house price growth is set to slow is compelling when you factor-in that the price of the average UK property looks overvalued in relation to the average income. Lets not forget that the psychological impact of the first interest rate hike since February 2000 will be far-reaching.'

'People are not going to have the financial clout next year to put significant upward pressure on house prices and we believe that house price inflation will fall to around zero by the end of next year', he added.