House price growth 'will be stronger than expected'

Mortgage provider HBOS has revealed that it now expects house price growth to be stronger than originally estimated.

While emphasising that annual price inflation will nonetheless remain lower than recent averages, the lender has predicted that growth in the market this year will come in at around six per cent, up from an original estimate of four per cent.

Once again London is expected to exhibit strongest growth rates - 12 per cent, according to the firm's economic forecast – but this is still dwarfed by expected growth in Northern Ireland, which will see price inflation of 23 per cent.

"Whilst house price growth was stronger than expected during the early months of 2007, there are now more signs that the market is slowing," HBOS chief economist Martin Ellis nonetheless advised.

The estimate roughly corresponds with Nationwide's own forecast, as outlined by the building society.

"We are confident that our original forecast published in December 2006 is still on track and we expect the rate of house price growth to fall from 11 per cent now to around the middle of the five to eight per cent range," confirmed Nationwide chief economist Fionnuala Earley.


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