Britain's cooling housing market will come further off the boil this year as prices are likely to rise just 10 per cent in 2003 compared with 25 per cent last year, a report said today.
The Royal Institute of Chartered Surveyors (RICS) predicted that a slowdown in wage growth and the overall weakness in the economy would lead to sluggish house price growth this year. Prices rose only four per cent in the first quarter.
Sales volumes in January-March hit their lowest level in two years while prices in April "were close to a standstill," RICS said.
"House price pressures are now abating due to subdued demand conditions as income growth slows and the impact of past interest rate cuts recedes," the report said.
"However, low interest rates and further employment gains, will put some upward pressure on prices through the rest of the year, particularly as uncertainty over the war in Iraq has passed," the report said.
British house price inflation is set to slow further in 2004, down to only five per cent measured on a fourth-quarter over fourth-quarter basis, RICS said.
That is slightly above the Bank of England's forecasts published last February, in which it predicted zero house price inflation by the end of next year.
House prices border on an obsession in the UK, where about two-thirds of households own their own homes.
PA