Halifax expects British house prices to be stagnant for next year

LONDON: Britain's housing market is likely to stagnate in 2012, with low interest rates offset by a squeeze on household budgets, according to mortgage lender Halifax.

In its outlook for next year, Halifax said it expected house prices to end 2012 in a range of down 2% to up 2%. Prospects for Britain's economy were “particularly uncertain” but the likelihood of the Bank of England leaving interest rates at a record low 0.5% for the foreseeable future would help support the market, it said. 

“Overall, we expect continuing broad stability in house prices nationally during 2012. Prices are again likely to end the year at levels close to where they begin with the market continuing to lack any real direction,” said Halifax economist Martin Ellis.

However, demand for homes would be constrained by rising unemployment and the weak outlook for growth.

“These pressures will come from a combination of subdued earnings growth, high (but falling) inflation, the substantial fiscal tightening that is taking place and an ongoing rebalancing of household sector finances with many families seeking to reduce their debts,” Ellis said.

Meanwhile, Britain had 11% more houses valued at 1mil or more available for purchase in the third quarter than it did a year earlier, Investec Specialist Bank said in a report yesterday.

 By Agencies