Peter Bolton King, Chief Executive of the NAEA, commented:
“Last year we forecast that prices would rise at a much steadier price and that is precisely what we have seen happening in the last few months. As expected, house price growth has begun to stabilise and we are currently seeing price corrections of around minus 1% per month. Our monthly survey of estate agents at the frontline of the market also reveals that the end of 2004 will see prices on average 6% higher than the previous year.
“However we are not expecting there to be any significant drop in prices. The economic circumstances of the present day are very different to the crash of the early nineties, when unemployment was high, rate rises were vicious and the economy was suffering from recession. If anything, activity is likely to pick up in early 2005 when buyers begin to return to the market and this will see prices stabilise once more.
“Interest rates have matched our prediction to the word, currently sitting at 4.75%. It is uncertain whether or not the Bank of England will see fit to inflict further increases next year, but it is evident that they are not required by an already-calming housing market. Any rises that do occur will not see rates push much past 5%.
“In short, once again the housing market is set to disappoint those anticipating the fireworks of a crash. Stabilisation is the most we can expect, with 2005 more likely to see a more sensible house price growth of around 3%.”