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The housing market boomed last year. What are the predictions for 2002

01:00 Thu 03rd Jan 2002 |

A.� On average house prices rose by around 12 per cent last year, the biggest annual increase for around 20 years. It depends who you listen to, but the general consensus between the big lenders such as the Nationwide and the Halifax is that the property market should remain relatively buoyant, but that prices increases will slow to an average of between five and six per cent.

However, it is worth bearing in mind that they predicted rises of between four and seven per cent for the previous year, so nothing is certain.

Q.� But there is a lot of economic doom and gloom around at the moment. Will people really want to be buying and selling property

A.� Apparently yes. Property prices continued to grow even post the events of September 11th in in the US, with December alone showing increases of 1.9 per cent.

A recent survey showed that one in four of us want to move in the coming year and that nine out of ten of them say the economic slowdown will make 'no difference whatsoever'� to their plans. Only six per cent of those surveyed believed property values would actually fall in the New Year.

However, the fact that there is a predicted slow down reflects the general concerns of slower economic growth, lower wages and bonuses and fears of unemployment.

Q.� What's behind the optimism

A.� A number of different factors. So far it looks like the British economy is bearing up better than many expected to the global downturn.

However, the principal reason is the incredibly low cost of borrowing at the moment, with November's cut in he Bank of England base rate meaning mortgages are at a 40-year low. Although the experts predict rates will rise again in 2002 they believe they will creep rather than shoot up to around 4.5 to 4.75 per cent by the end of the year with further moderate rises the following year.

Economists also expect these to be countered by an improvement in the global economic outlook come autumn.

Q.� So where are the property hot and cool spots likely to be in the coming year

A.� East Anglia came top of the hot spot list last year with average increases in property prices of over 18 per cent, and their are few signs of a slow down in the region.

Much has been written and said about the property boom in London and last year the average cost of a house or flat rose 14.3 per cent to �168,783. This is expected to slow down substantially in 2002 on the back of concerns over job prospects and lower bonuses and the same applies, although perhaps to a slightly lesser extent, to the suburbs and the commuter belt.

The South West saw the second highest rise in 2001 but this is likely to moderate in the coming year while, thanks to a relative plenty of affordable housing stock prices in the North West and Humberside and Yorkshire are predicted to continue to show strong rises.

Northern Ireland, which saw an average rise of just 3.5 per cent is last year is again predicted to be the 'coolest' spot, with Scotland also expected to experience a sharp slow down on with big job losses taking their toll.

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By Tom Gard

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