22 Oct

'Property market to ride out recession'

'Property market to ride out recession'

The UK housing market is well placed to ride out any economic downturn, it has been predicted.

According to a new report from Ernst & Young the UK economy will grow by 2.1 per cent inn 2008 - a revision from the firm’s original forecast of 2.5 per cent.

However, although there is a possibility that house price growth will slow, the property sector will not see a period of recession, the Item Club forecast predicts.

According to the financial analysis firm, the property sector will be buoyed by a lower outlook for interest rates and a strong labour market.

Peter Spencer, chief economic adviser to the Item Club, said: "Activity is likely to fall and prices may stall through 2008.

But as interest rates come down and new supply remains restricted, the foundations will be laid for renewed real price growth in the long-term."

The report did, however, identify property buyers who have borrowed a very high proportion of the value of their properties as potentially vulnerable to an economic dip.

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