The Centre for Economic and Business Research has predicted that UK house prices are set to fall in the coming months, but won’t crash.

However, whilst prices are slowly slipping – they’re expected to fall by 5% by 2007.

The average price of a home is expected to be £155,329 in two years, down from the current average of £163,353.

A decade of house price rises will end this year. Coupled with this will be the dramatic drop in annual house price inflation, down from 18.3% in 2004 to 4.2% this year.

So why the drop?
The Centre for Exonomic and Business Research believes that higher interest rates, the limited building of new homes, rising house prices, stealth taxes and student loans had all cut into the housing market.

The cost of buying a home may increase during 2007 also with the introduction of Home Information Packs. These packs are expected to add £1000 to the cost of selling a home. Ministers confirmed that these packs are expected during 2007.