Britain‰¥�s biggest building society the Nationwide reported last week say that while prices will slow across the country they will not drop dramatically.

And a series of interest rate cuts in the New Year hinted at by the Bank of England could also kick start the market back into life.

Other property experts dismissed previous pessimistic predictions and told homeowners they can expect prices to continue rising in the long term.

Stuart Law, Chief Executive of Assetz, said, ‰¥�The Nationwide, like most building societies, tends to significantly underestimate house price inflation at the beginning of each year.
prediction

‰¥�Next year appears to be no different, with today‰¥�s prediction of 0 per cent.
‰¥�In contrast, I would expect house prices to increase by five per cent in 2008.‰¥�

Warren Bright, chief executive of webiste propertyfinder.com, forecasted that interest rate cuts will reignite the markets.

‰¥�With the Bank of England now signalling that rates could fall by half a percent by the middle of next year, we think no house price growth is too pessimistic.

‰¥�Month on month prices are likely to be subdued in the first half of the year but we expect prices to pick up again in the second half.

‰¥�It‰¥�s much more likely that we will see slower activity levels than weak house prices.
‰¥�However if the government enforces its plans to demand a full HIP is produced before a home is marketed from the beginning of 2008, that could slow things down markedly.

Red tape

‰¥�The government should leave the housing market alone, not tie it up in red tape.‰¥�
The Nationwide said there will be large regional variations in the performance of the property market during the year, with Scotland expected to see price rises of four per cent, while at the other end of the scale values here in the North may fall by five per cent.
Fionnuala Earley, Nationwide‰¥�s chief economist, said, ‰¥�House prices recorded another strong year in 2007, underpinned by significant economic momentum, ongoing housing shortages and strong buy-to-let demand.

‰¥�That being said, momentum is now fading, and a number of factors suggest that house price inflation will drop by this time next year.

‰¥�The main reasons for this more subdued outlook lie on the demand side of the market, where a slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations appear likely to reduce the level of activity.‰¥�