House price growth to slow

Mortgage bank Bradford & Bingley today reinforced predictions of a slowdown in the housing market, warning of "significantly lower" price inflation next year.

The group, which has increasingly focused on the buy-to-let sector, said it was clear house prices had already softened in London and the South. It added: "We believe that in 2003 average house prices will grow at a significantly lower rate than that experienced in 2002."

Analysts have long believed the housing boom will begin to cool next year and have warned of a sharp correction if prices continue to soar.

Housebuilder Berkeley yesterday indicated it was becoming harder to sell single detached houses in the home counties and large apartments in London.

Bradford & Bingley said that despite predictions of slower growth, low interest rates should underpin the housing and mortgage market going into 2003.

It added that with total lending balances rising to more than ?20bn since June, it was on course to beat profit expectations this year.

The City believes Bradford & Bingley will generate profits of around ?265m and the bank said it was "comfortable" it would exceed this goal.

Chief executive Christopher Rodrigues added: "We continue to make good progress against our key strategic objectives."

The group said house prices were already falling in London while price inflation had slowed in the south of England.

Mr Rodrigues said: "These are good things as there has been a degree of irrational exuberance and the rate of growth needs to slow. The customer is getting sensible and looking for value. Our best guess would be that house prices will grow in the low single-digits next year."