Lunchtime news Wednesday 2 January 2024

Welcome to 2008. And it’s already another year of statistics, forecasts, and surveys, as the pundits ask – will house prices go up or down? Most experts predict that prices will remain flat, or may only rise a little during the next 12 months.

December house price figures from Nationwide came out over the break and indicated a 0.5 per cent drop for the month across the UK, bringing down the annual rate of house price inflation to 4.8 per cent compared to 10.5 per cent a year earlier. Nationwide expect that annual house price inflation will have dwindled to nil by the end of 2008. Halifax, another big lender, also forecast that growth this year will be flat. It said the market has yet to feel the full effect of the market downturn and predicted a 15 per cent drop in sales across England and Wales.

The Council of Mortgage Lenders agrees that as a consequence of the credit crunch annual house price rises will be small. CML is anticipating a 1 per cent annual increase. Demand for new mortgages is expected to reach £90 billion during 2008, but only around £60 billion is available in savings with banks and building societies. If money isn’t released by financial institutions, a slump in house sales could result.

The British Bankers’ Association revealed that November had seen the second lowest number of mortgage approvals on record. At less than 45,000 approvals for the month, the figure was more than 43 per cent down on November 2006, and they expect much of the same for 2008. The Royal Institution of Chartered Surveyors also predict a flat year ahead, but estimates that interest rates will need to be cut to 5 per cent to offset any short-term downturns in sales and prices.

The armed forces however have received some good news over the new year. The government is to extend its Homebuy scheme, where key workers can access low- or zero-interest shared equity home loans, backed by the government and selected mortgage providers. Until now, MOD staff were only eligible for new build and intermediate rent (discounted rent) schemes. This could increase the potential purchasing power on a first home by up to one third for a couple with a joint income of £40,000.

But everyone else will be paying more for their council tax and service charges, according to the Local Government Association. Average council tax bills are expected to rise by around 4.5 per cent in April, making a total increase of more than 100 per cent since Labour took office in 1997. A spokesperson warned that services for the elderly might have to be cut and leisure and arts centres closed to keep taxes down.

And finally, a house was saved from being burned down by a giant pair of knickers. Two men accidentally started the frying pan fire that they put out with a pair of size 18-20 cotton pants doused with water. The owner of the pants said her son and nephew did what most people do and ‘panicked… but they found a pair of my knickers in a washing basket and basically used them as a fire blanket’.