According to recent reports house price inflation in the UK dropped again at the end of 2007, with a sharp fall in inflation at the end of the year. In December house price inflation levels stood at 5.2%, and according to industry officials this was just half the inflation rate compared to three months previous. House prices for December went up by 1.3% but officials state that this was the first rise in a four month period.
The housing market has been experiencing a slowdown for a number of months, and house price inflation levels now show the extent of this slowdown. One industry official stated that the fluctuating pattern of house price rises and falls was a typical sign of a more subdued market. He added that there was an overall drop in house prices over the final quarter of last year, where prices were slightly lower than in the third quarter of the year.
Many industry experts have predicted that the housing market will continue to cool over the coming year, with some predicting that house prices will stagnate and others predicting that house prices will continue to fall.
One industry official stated that the whole industry had been surprised at the speed at which house price gains had slowed down. He added that expectations of further house price falls had resulted in many lenders tightening up on their lending.
Officials state that the housing market is still responding to the series of five interest rate hikes between August 2006 and July 2007, and this is despite the fact that the Bank of England recently cut interest rates at the beginning of December.
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