OUR forecasts for the end of September 2003 underestimated the third quarter rise in prices recorded by the Land Registry this week. For England and Wales we predicted an average property price of £149,900, but the actual figure was £161,700; for Greater London our prediction of £242,250 compared with £262,000 in reality and for the South East our figure of £194,900 compared with the Land Registry’s £204,400.
Despite this upward adjustment, our predictions for the end of June 2004 have risen only slightly, as many clients are selling into what they see as an unsustainably strong market. For Greater London and the South East, we expect prices to fall 3.1 per cent and 0.3 per cent respectively from their end of September actuals. Falls are expected in Kensington and Chelsea (2.6 per cent). The revised expected rises are 4.5 per cent for England and Wales, 7.6 per cent for the North and 3.7 per cent for Wales.
Last week’s interest-rate increase may not have much effect, but if price rises do not weaken the Bank of England may be forced to raise rates further with the concomitant risk of a crash rather than a soft landing.