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What they said about 2006 and what we said

THOUSANDS of homeowners could lose at least £10,000 off the value of an average-priced home next year.

According to one critic, which runs regular house price forecasts up to 2010, the largest falls are likely in Eastern England, with falls of more than five per cent expected to be commonplace in Hertfordshire, Essex, Suffolk, Bedfordshire and Norfolk.

But the critic also reckons falls of four to five per cent are on the cards in counties like Oxfordshire, Kent, Surrey, Buckinghamshire and Sussex. And South-West England will also see many falls of more than four per cent.

But another critic predicted 2006 would see no change in house prices nationwide — with five per cent rises in prime Central London locations and better parts of the South-East balanced out by "small price falls up to five per cent in areas like the North and Wales, where falls are likely after two years in which prices have rather overrun the spending power of local buyers".

The critic also said: "With mortgage arrears and repossessions continuing at low levels, employment still robust and interest rates likely to be heading down rather than up, we see no trigger for substantial house price falls.

"Rather, what we see is encouraging room for price growth in those markets which have been sluggish in recent years."

Property buyers in 2006, he said, needed to target "areas in the right stage of the cycle, which means London and the South-East".

"Find an area with a good employment market for young people, with plenty of tenant demand, and likely housing scarcity, which usually means the South-East.

"Otherwise, find areas where specific regeneration projects are likely to boost annual return above the market average in the next few years. Around London, that means areas like Stratford, Wembley, Greenwich and Croydon."

How do other 'experts' see the next 12 months?

Lee Grandin, managing director of Landlord Mortgages, the UK's largest specialist buy to-let broker: "It all depends on interest rates. In 2005, we held our breath as the media predicted increases of at least one per cent, which would have put our market into a big reverse.

"In 2006, we hold our breath again. With US rates rising, there is again potential for a rise, but I don't see it hitting sales volumes. Rates look good, and lenders must offer highly competitive buy to let rates to hold market share."

"Where would I buy? As an investment, find something within 30 miles of your home, because then you understand the market better.

"Buy cheaper, scruffy property rather than brand new. I personally like Bracknell, a sixties new town which has to smarten itself up by replacing concrete monstros-ities with better-looking buildings."

Another critic said "Prices could go up by ten per cent in 2006 as purchasers who have been waiting for a downturn in 2005 realise then-ploy has backfired.

"Sales have fallen off an awful lot in 2005, but prices haven't crashed. They will strengthen at the start of the year, but might weaken later in the year as sellers try to conclude a deal before the Government's Home Information Packs come into effect in early 2007."

He added: "I would be tempted to buy a retirement flat to rent out in southern England, with the long-term aim of living there myself. "I notice a lot of people are selling up everything they have at 55, to become tenants so they can enjoy their money and leave nothing to the Government. They aim to rent in between jaunts around the world."

Another critic said "Although the city expects a rate rise early in 2006, I am by no means convinced it will happen. Unemployment in the private sector could also creep up, but the resilience of the housing market this year has been impressive.

"I expect house prices to rise nationally by up to two per cent in 2006, with London and the South-East doing better than the norm because they have lagged in the last couple of years.

"Where would I buy? Buy a bigger home to live in, if you need the space."

So based on all the above incorrect predictions for 2006 who knows where 2007 will take us!

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