Market will stabilise

The UK housing market is set to stabilise next year, according to the National Association of Estate Agents (NAEA).

A forecast published by the organisation reveals that it expects house price growth to level out to zero per cent over 2008.

Although this may not sound impressive, it is more positive than the figure some commentators have predicted and the NAEA is confident that underlying factors will continue to support the market during a difficult time.

"These factors relate to the principle of supply and demand. At a very basic level, if supply is limited and demand is high then prices will remain stable or rise. We know that supply is a problem for the UK - a fact highlighted by the government recently as it revised its house building targets upwards," said Peter Bolton-King, NAEA chief executive.

"Similarly, we know demand will continue to increase. The population is rapidly growing and at the same time the number of single person households is also on the rise.

"While the market may have been asked to weather some considerable storms recently, the basic supply and demand dynamic is what will help to keep it steady in the long-term," he continued.

The Bank of England cut the base rate of interest by 0.25 percentage points in December, with many commentators hoping that this will help to free up the housing market.