Sentiment in the property market recorded a change in November, with many market indicators suggesting a fall in growth into the start on 2008. The headline figures differ remarkably depending on the source, though many analysts concur on a dismal end to 2007.

Nationwide’s monthly house price index reported a fall of 0.8% in November brining the figure for annual house price growth down to 6.9%. This is the first monthly fall that Nationwide has recorded since February 2006, and the largest since June 1995.

Commenting on the figures, Fionnuala Earley, Nationwide’s chief economist said “Looking forward, it’s clear that there are uncertainties in the market, not least from the continuing turmoil in the UK’s financial markets and the overall impact that this may have on the future performance of the UK economy. We already expect economic conditions to be more difficult for the housing market next year, but we do not expect a recession.

“Furthermore, with interest rates on the way down and the continued undersupply of housing in the UK market, the underlying fundamentals are perhaps more positive than the recent swings might suggest.” Ms Earley concluded.

Halifax’s monthly house price index offered an optimistic insight in to the economy. According to Halifax, the economy has now grown for 61 successive quarters.  This represents the UK's longest running period of unbroken GDP growth on record; a performance that no other developed nation can match.  However, Halifax also recorded lower market activity. Mortgage approvals to fund house purchase fell by 12% in November to 88,000 (seasonally adjusted).  Approvals in November were 32% lower than a year earlier. New buyer interest in purchasing a house fell for the eleventh successive month in November.Martin Ellis, Halifax’s chief economist, commented "The housing market has slowed in recent months as the increase in interest rates between July 2006 and July 2007 has taken effect.  Higher mortgage repayments and falling real earnings have put pressure on households' income, resulting in a slowdown in both house price growth and activity”.

The Council of Mortgage Lenders (CML) has also spoken out over concerns over the housing market. At the seventh annual CML conference, it was predicated one in three mortgage applications would be rejected next year if banks remained reluctant to lend to each other.

Mr Briault, retail managing director of the Financial Services Authority, told the conference that homeowners with poor credit records might not be able to remortgage on any terms next year
The CML's director general, Michael Coogan, added ""The Bank of England needs to do more, as other central banks have done. It needs to reduce rates to boost consumer confidence and be more flexible in providing liquidity.”

The CML predicts that repossessions will rise by 75 per cent this year to reach 30,000, and that the figure will rise again to around 45,000 in 2008.

The full effects of the Home Information Packs (HIP) scheme being rolled out to cover all properties will become obvious after the 14th December.

According to the CML, HIPs will worsen affordability for first time buyers. This is because sales of houses with one or two bed rooms are more likely to be affected be by the cost of the packs, as the £300 – 350 price of the packs is more relative to the asking price on these properties.
Nationwide claim that the HIPs scheme will “speed up the process by removing those not serious about moving, but is likely to reduce the number of speculative sellers which could limit the available supply and make the house search process longer.”

Both the UK and global economies are likely to head for an acute slowdown due to the credit crunch; the volatile housing and financial markets, as well as rising commodity prices, are likely to exacerbate the current situation.

The Organisation for Economic Co-operation and Development (OCED) has cut its growth forecast for 2008. Growth in the 30- nation area covered by the OCED is now forecast at 2.3 percent, down from 2.7 percent forecast in May.

The Bank of England’s Monetary Policy Committee (MPC) decision to cut interest rates to 5.5% for its December meeting cam as welcome relief to many economists, who claimed that leaves interest rates at 5.75% would have further negative effects on the housing market, which would in turn have negative repercussions on the economy as a whole.

In making the decision to cut rates, the majority of members on MPC concluded that the risks of declining activity outweighed any risks of rising inflationary pressures.
Current inflation levels are at 2.1%, which is marginally higher than the Bank of England’s target of 2%.