Adverse Mortgages UK

Growth in house prices will slow slightly next year, but will nevertheless continue to see an increase in value, a leading estate agent has forecast.

Estate agents Knight Frank have predicted that house prices in the UK will grow by six per cent in 2007, less than the nine per cent expected this year, but nevertheless considerably ahead of inflation and growth in wages.

Liam Bailey, Knight Frank's head of residential research, said: "The housing market, which staged an unexpectedly strong recovery in 2006, is expected to remain in robust health throughout 2007.

"We anticipate that the market will be particularly strong during the first half of 2007 with purchase activity standing at or above the ten year average until June."

Scotland and Northern Ireland are expected to lead growth across the country, as these locations continue to benefit from the boom in house prices that began around the start of the new millennium.

"Scotland and Northern Ireland will lead with growth at above ten per cent, reflecting the tail end of the 2000s' boom still fizzling in the far north and west of the UK," Mr Bailey added.

However, growth in Scotland and Northern Ireland is not expected to be sustainable in the long term, as the growing cost of borrowing affects buyers in these areas particularly badly.

"Affordability will be squeezed out during 2007 and both Scotland and Northern Ireland will underperform the UK average from 2008," Mr Bailey concluded.


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