The National Association of Estate Agents (NAEA) is predicting that the UK housing market will hold steady in 2008 thanks to the continued presence of key underlying strengths.

While an unprecedented number of unknown factors make the movement of the market even more difficult to predict than usual, the basic supply and demand factors remain the same and will help to bolster prices through less fortunate times.

The international ‘credit crunch’, issues with Northern Rock, successive interest rate rises and launch of Home Information Packs (HIPs) are all major events that clouded the housing market in the second half of 2007. As the market strives to right itself again it is hoped that the worst is now over, however all of these events have left behind them considerable uncertainty for 2008. Questions over future problems that may come out of America, the size of any credit squeeze and the exact impact of the HIPs roll out still hang in the air. These could well have a significant impact on the fortunes of the market. In the meantime, however, there are a number of underlying factors that will help to keep the market steady.

Peter Bolton King, chief executive of NAEA, said: “These factors relate to the principle of supply and demand. At a very basic level, if supply is limited and demand is high then prices will remain stable or rise. We know that supply is a problem for the UK – a fact highlighted by the government recently as it revised its house building targets upwards. Similarly, we know demand will continue to increase. The population is rapidly growing and at the same time the number of single person households is also on the rise. While the market may have been asked to weather some considerable storms recently, the basic supply and demand dynamic is what will help to keep it steady in the long term.

“The market as a whole is clearly not as strong now as it has been over the past seven years and this is down to a combination of factors. While we expect to see a much more subdued picture in 2008, the underlying strengths remain the same and we are hopefully that these will help the market to weather adversity over the coming year.”