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CML's steady house price outlook

The Council of Mortgage Lenders have put forward their own view of what is going to happen to the level of prices in the housing market over the next few years, with only marginal differences to the outlook recently promoted by the Royal Institute of Chartered surveyors.

Barring unforeseeable economic upheaval, they predict that prices are going to remain fairly settled for the next three years. Agreeing with RICS that prices are likely to rise by an average of 6 percent next year, they are more conservative in their longer term view. They estimate that growth will tail off slightly in the years 2002 and 2003, with prices rising by an average of just 5 percent.

As with the surveyors' predictions, a perceived stability in the broader economic climate underpins the forecasts. It seems that most authoritative observers believe that the current system of managing the country monetary policy through an independent committee is one that will bring long term stability. The CML believes that interest rates have probably now peaked, with base rates unlikely to rise or fall by any extreme amounts over the next few years.

The rate of house price growth has historically sat at around 3 percent above the rate of inflation. The CML predicts that this will remain the case, with steadily growing household income and continued consumer confidence both helping to maintain this trend.

The CML's Director General Michael Coogan noted, "The stable outlook for the economy and interest rates is helping to remove the old boom-and-bust cycle from the housing market. The prospects for stability in the economy, interest rates and the housing market are helping home-buyers to look to the future with more certainty than in the past."