Alliance & Leicester offers forecast for 2005

He said: "The fundamentals underpinning the housing market remain extremely positive and as such, we forecast that house prices will remain broadly stable. Interest rates remain at far lower levels than in the past and unemployment also remains extremely low. However, house prices are influenced by consumer confidence and if the continued speculation and "talking down" of the market continues then this will inevitably have an impact on the market and an adjustment in prices may occur.

"The general environment for home ownership will remain attractive, bank base rates will stay at historically low values, we forecast continued low unemployment, and inflation which appears to be well controlled. Most of 2004 was a ‘sellers’ market, we predict that next year will be far more balanced and that purchasers will be able to be more selective in choosing their next home "

A&L also predicts that the re-mortgage market will remain buoyant as consumers will still have access to great deals. "However, I would recommend that all customers ask their existing lender if they can have the same deal as a new customer before they look to re-mortgage. Unlike many lenders, Alliance & Leicester Mortgages allows all of our existing customers access to the best deals — they should check to see if their lender does the same, " Cooper said.

Cooper added: "We don't predict any major change to interest rates next year, unless there is a major change in the world economy or domestic retail spending.

"For purchasers, I would advise them to consider any local factors which may influence where and when they buy. A local employer announcing job closures will inevitably have an impact on house prices but could also present first time buyers with a great opportunity to buy their first home. Conversely a new by-pass, train service, tram line or tube link could have a significant impact on the prices in a particular area. The internet can be a great source of information and many lenders offer a cheaper mortgage deal online too."