Halifax’s housing economist, Martin Ellis, provides his thoughts on the housing market for the year ahead:
"The housing market has proved highly resilient in recent months despite the weak economic recovery and the significant deterioration in the outlook for both the UK and global economies.
"House sales and the supply of properties on the market for sale have remained very stable since late 2010. These steady market conditions have helped to stabilise house prices and sales. As a result, the average price is currently little changed from that at the end of last year.
Broad stability in house prices nationally during 2012
"This resilience in the face of very challenging economic conditions provides encouragement regarding the prospects for next year. Overall, we expect continuing broad stability in house prices nationally during 2012. Prices are again likely to end the year at levels close to where they begin with the market continuing to lack any real direction.
Low Bank Rate and favourable affordability to support the market...
"The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future is likely to continue to support the market over the coming 12 months. Largely as a result of low rates, typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 26% in 2011 Quarter 3. This is significantly below the average of 37% over the past 25 years and is at its lowest since 1997. Continuing low rates should further support the favourable affordability position for both those who already have a mortgage and those who are able to raise the required deposit to buy a home.
"The favourable affordability position should also help to keep down the numbers of homeowners forced to sell their properties because they cannot keep up with their mortgage payments. A significant rise in the number of forced sellers is often a factor associated with sharp house price falls.
...in the face of significant constraints
"Weak economic growth and the prospect of continuing high, and probably rising, levels of unemployment led by large scale public sector job losses, will constrain housing demand. Continuing significant pressures on householders' finances will also limit many people's ability, and willingness, to buy a home. These pressures will come from a combination of subdued earnings growth, high (but falling) inflation, the substantial fiscal tightening that is taking place and an ongoing rebalancing of household sector finances with many families seeking to reduce their debts.
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