Russell Jervis, Managing Director of haart estate agents says: "2004 has been a game of two-halves for the housing market. Prices rose steadily during the Spring until June when they began to cool off. From July onwards interest rate rises took their toll on the market as we saw new applicant levels fall across our network and an increasing amount of sellers having to reduce their asking prices to achieve a sale. Price rises at the start of the year hit first-time buyers hardest with levels falling from 35% of the market at the start of the year to 15% by December. This has all meant that for the first time in many years, house prices will have started and finished the year at almost the same level.
"For 2005 we're expecting to see a similar story - but in reverse. For the first six months house prices will continue to level-off and this process of stabilisation should create renewed confidence meaning that all those people who have been waiting to see what happens to prices will steadily come back to the market.
"The effect of five interest rates hit the market hard in 2004 but confidence in the market should not be affected by rises in 2005 as I believe rates have already reached their peak for this cycle at 4.75%.
"Property remains a solid investment and renting continues to be more expensive than borrowing. Our forecast for 2005 is that house prices will rise by 3-5 per cent."