Soft Landing Predicted

Wednesday, June 23 2004

Two major independent financial bodies – Standard & Poor’s, the credit rating agency, and the Centre for Economics and Business Research (CEBR) – have predicted a soft landing in the UK housing market over coming years.

The CEBR, a respected independent consultant, forecasted on Monday that UK house price inflation will slow gradually over the next two years, dipping to -2.3% in 2007, before recovering to 2.6% in 2009.

CEBR’s regional analysis predicted that house price inflation would be less buoyant in the North East of England, Scotland and Wales. In these areas house prices are predicted to be more than 10% lower in 2008 than in 2004. But in London and the South East of England house prices are predicted to be higher in 2008 than in 2004.

CEBR’s report was followed yesterday by Standard & Poor’s UK Mortgage Lenders performance report. The S&P report predicted ‘the slowdown in the market to be orderly, but there is a risk of a sharper than expected correction, which could be linked to a more general decline in UK household economic confidence.’

Their reports follow comments last week from Mervyn King, Governor of the Bank of England, giving stark warnings over the overinflated nature of house prices.

Standard & Poor’s