Simon Lambert, This is Money, January 2006

PROPERTY predictions come thick and fast at this time of year and the only consensus the experts have reached is to agree to disagree.

House price forecasts from major industry players have ranged from gloomy prophecies of falling prices to optimistic anticipation of a relatively buoyant market ahead.

All of the firms and organisations that issue figures on house prices have their own vested interest and draw conclusions from different data.

But regardless of the politics, what you want to know is has the market - generally judged to have risen just 2% this year – run out of steam? And what are the chances of selling your home in 2006?

To give you a helping hand This is Money has pulled on its psychic hat and reviewed the predictions, letting you know what to expect in 2006:

• John Charcol – 5.5% increase

The independent mortgage brokers issued the most upbeat prediction for house prices in 2006, with expert Ray Boulger claiming there will be a bright light at the end of 2005's relatively slow tunnel. He said interest rates could be cut by up to 0.75% next year, helping to fuel house price growth.

This is Money verdict: Two years ago predictions of a 5.5% increase in prices would have been seen as cautious, but after a slow 2005 Charcol's forecast is seen as bold. If Mr Boulger's crystal ball is to be proved right it will be demand in Scotland, Wales and the North most likely to deliver.

• Royal Institution of Chartered Surveyors – 4% increase

Rics reckons the property market had a soft landing in 2005, and predicts a 'modest' upturn next year of 4% and another 3% in 2007. It sees interest rates cut by 0.25% and mortgage approvals rising from a five-year low this year thanks to more affordable borrowing.

This is Money verdict: Rics sees affordability playing its part in keeping the market in steady growth. If interest rates are cut again it will help people stretch their mortgage repayments, but with average first-time buyer prices now £152,331 – almost seven times the average salary of £22,941 – people will still struggle to get on the ladder.

• Halifax – 3% rise

Halifax forecasts a steady property market in 2006, with prices rising broadly in line with retail price inflation. The only areas it sees with growth pushing towards its long-term average of 8% are Scotland (7%) and Northern Ireland (5%). The silver lining for the lender is earnings growth, which it says will outstrip average price rises and go up by 4.5%.

This is Money verdict: If average earnings rise more than house prices it will be good news for first-time buyers. This eventually means good news for everyone else, as people at the top of the ladder need more people joining at the bottom. The only problem is despite low average growth this year of 2.2%, the Office of the Deputy Prime Minister says first-time buyers' prices rose by 5%.

• Hometrack – 1% rise

The property research firm takes its figures from 7,500 estate agents across Britain and the industry normally known for its bullishness claimed prices fell by 1.3% in 2005. Hometrack has predicted a below inflation 1% rise that would see the value of people's houses drop in real terms.

This is Money verdict: You know something has gone a bit awry when estate agents are talking the market down. Their caution reflects the mantra reeled out in 2005 that sellers need to realise they have to price their home realistically. If you want to sell your home in 2006, set a sensible price that you will accept.

• Nationwide – 0% to 3%

Britain's biggest building society claims its spot at the glass half empty end of the spectrum by saying prices could remain unchanged – although by covering its bases and predicting up to 3% as well it could be considered mildly confident too. It said there could be a marked increase in sales activity but does not see that translating into rising prices.

This is Money verdict: Nationwide has kept its options open by suggesting between 0 and 3%. The lower end of the scale will see real value lost through inflation, while the upper end will see a slight gain, or value remain steady, if inflation targets of 2% are met.

• 2006 property market winners and losers

Going Up:
Scotland
Northern Ireland
Posh London addresses
Cheaper areas close to large cities
Three-bedroom family homes

Going down:
One bedroom flats
Luxury homes at inflated prices
South West England
East Anglia
Estate agents' bonuses

sponsored advertisors