Housing market 'will slow sharply'

THE Woolwich today joined the growing list of mortgage lenders predicting the housing market will slow sharply over the next 12 months.

The bank said homeowners' confidence was already waning and, with more interest rate rises in the pipeline, consumers were likely to tighten their belts in coming months.

It predicted house prices would rise by a modest 5% in 2004 compared with about 15% this year.

A survey by the Woolwich found that 56% of homeowners believe house prices will remain the same or rise no more than 5% next year. That compares with 43% a year ago.

Fewer people expect property values to rise sharply next year. Some 26% of those surveyed thought prices would rise by more than 5%, compared with 32% last December.

Andy Gray, head of mortgages at the Woolwich, said: 'Consumers clearly believe that 2004 will be a much more stable year for house prices than previous years. The massive fluctuations we have seen are beginning to even out as inflation drops in line with consumer confidence in the economy as a whole. This is good news for the housing market in general as it will continue to inject a sense of realism about the future.'

People living in the South East of England and Scotland were most bullish about house prices, with almost a third thinking prices would rise by more than 5% in 2004.