House prices 'set to remain flat'

Housing estateHouse prices are likely to remain flat throughout next year as first-time buyers continue to struggle to get on the property ladder and the market remains strongest in London and the South, Halifax has said.

The lender predicts that prices will remain within a margin of between plus and minus 2% during 2013, ending the year at similar levels to now before slowly climbing as the economy strengthens.
It added that house prices rose by 1% month-on-month in November to reach an average of £160,879, but they lack any clear direction, with five monthly rises and six falls this year.

Prices are 1.3% lower than they were a year ago, which shows "remarkable stability" against the tough economic backdrop, Halifax said.

Halifax housing economist Martin Ellis said pressures such as rising utility prices and slow wage growth are likely to continue to restrict the number of home buyers, while the outlook for the wider UK economy remains unclear amid continuing problems in the eurozone.

Mr Ellis said that against this difficult background, any house price growth is likely to remain "modest" in the next few years. Speaking about his predictions for next year, he added: "Prices are again likely to end the year at levels close to where they begin, with the market continuing to lack any genuine direction."

The study predicts that conditions for would-be first-time buyers will remain tough next year, which will in turn keep up the pressure on the rental sector.

Rents have soared as people have remained trapped in the sector, either because they cannot raise the deposit needed or meet lenders' toughened borrowing criteria. The potential for attractive returns on rents for landlords will probably mean further growth in the buy-to-let sector, Halifax said.

The North/South divide is also set to continue, with house prices likely to be strongest in London and the South East amid strong demand from overseas buyers looking to protect their money from the eurozone troubles, Halifax said.

Halifax said that the market will be given some support next year by measures such as a multibillion-pound Government scheme launched in August to boost lending to firms and households, which has caused an increase in mortgage availability.
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