House prices to stay stable, with good news for first-time buyers

A new report into the state of the property market has found that house prices will remain stable in 2005, with good news for first-time buyers.

09:48 16 December 2004

A new report into the state of the property market has found that house prices will remain stable in 2005, with good news for first-time buyers.

Healthy employment levels and current housing affordability will help to ensure there are no major corrections or price reductions in the property market next year, said industry expert David Bexon.

Mr Bexton, chief executive of SmartNewHomes, said the market in 2004 has broadly followed predictions of last year, with house price growth slowing significantly in the last quarter.

"The series of interest rate rises by the Bank of England had a stabilising effect on the market, which is probably healthy in the long term," he said.

Mr Bexon added: "In addition, the supply/demand equation is still in favour of new homebuilders, which also bodes well for the industry.

"I believe we will witness annual growth nationally of between two and five per cent. With most areas of the South being at the lower end of this scale, however certain areas of the North will exceed five per cent growth growth.

"Our analysis indicates that the likely hotspots in 2005 will be in the North East, Wales (particularly North Wales) and the East Midlands. Some rural areas such as Shropshire will also be very popular and the North and South West will remain strong outside of the city centres that have already benefited from the strongest growth and investor activity.

"The result of these trends will be a more competitive market for house builders where achieving sales targets will be more difficult than in the last two years. I would therefore expect to see greater use of incentives and added value services, which will be good news for homebuyers and in particular the struggling first-time buyers."