The FTSE-100 grew by 16 percent in 2005, compared to housing market growth of 3 percent. But the FTSE still remains 10 percent below its 1999 level, whereas house prices are more than twice as high as than at the end of 1999.
Rather than seeing a rapid and significant correction in house prices as predicted by some, we are more likely to see a continuing smooth slowdown as lower price inflation attracts more demand, and thus liquidity, into the market.
Estate agents have consistently reported increased buyer interest over the last few months, which should help to support the market going forward,
The current background suggests that the market will continue to cool in a contained fashion, but it will be some time before we can expect prices and activity to return to the growth rates seen in the last two years.
It's come through a little bit more than we were expecting even two months ago. I don't think it can be sustainable at that level going forward. People are stretching themselves.
As we expected, the strong rebound in prices in October was temporary, driven by buyers postponing purchases until after the August base rate cut and the overall picture remains one of stability rather than acceleration,
The cooling in prices in April was not unexpected given the surge in March. However, the underlying picture remains reasonably healthy as demand conditions have remained quite firm.
Affordability and overall debt levels will still have to adjust to more comfortable levels before we can expect any widespread increase in demand and thus prices,
Estate agents are reporting increasing buyer interest and that buyers and sellers are reaching agreement on price more readily,