Lower growth rates could help first time buyers

20-Jul-2007

Prospective homeowners looking to purchase their first property will see price growth slow over 2007, two leading lenders have confirmed, though the strength of the housing market means that some forecasts have now been scaled up.

HBOS has said that its now predicts growth of six per cent in the sector this year, up from its initial estimate of four per cent.

But Nationwide has confirmed that growth will fall back slightly, with both providers emphasising the fact that signs of a more subdued market are now coming into view.

"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," Nationwide chief economist Fionnuala Earley announced this week.

"Whilst house price growth was stronger than expected during the early months of 2007, there are now more signs that the market is slowing. We expect this trend to continue. House price inflation should ease over the second half of the year," added Martin Ellis, chief economist at HBOS.

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