Any recovery, he warned, will be strongly dependent on the major lenders making mortgage finance more available. Bank of England decisions on interest rates will also have a major effect on the market. The monthly wait for the MPC’s decision on interest rates will be a nervous time for both existing and potential borrowers.
However Mr Bolton King said that, while the housing market faces a tough year, he was confident that no widespread drop in house prices would occur.
He said: “The housing market remains in a state of fragile recovery as the year ends. Frankly, however, this recovery is threatened by the stubborn refusal of major lenders to loosen their self-serving restrictions on mortgage lending.
“A historically low rate of interest has benefited those people who already have a mortgage, but it is likely that over the next 12 months it will rise. That will place more pressure on existing borrowers but also remove mortgages from the reach of even those house buyers with large deposits.
“The danger is that a backlog of pent-up demand for property emerges. That means the market will suffer from lack of demand in the short term and potentially be distorted by a rush of demand when these people can finally get onto the ladder.”
He added: “We do not believe that there will a widespread fall in house prices over the next 12 months. There will be ups and downs, but I’m confident that we won’t see a plunge.
“What we will see is the emergence of ‘postcode power’ – as demand for property in some areas fuels a healthy market while other, less desirable areas, are in danger of being left behind.”
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