Connells Survey and Valuation believes the housing market will recover in 2008 after its recent downturn.

Ross Bowen, managing director of Connells Survey & Valuation, said: “The UK housing market has hardened this year, more significantly over the second half. As a result we have seen a fall in the number of surveys undertaken in the market, both for purchase and remortgage purposes.

“Until Decembers cut in interest rates, consumers have had to endure five successive hikes in rates which have already stretched the budgets of some and there is anxiety over the impact of this for home owners rolling off their discounted mortgage schemes next year. Lower confidence has contributed to reduced transaction levels, and this has had a knock-on effect with the market starting to adjust some property values. While we expect house prices to come under continued pressure next year, the wider economy remains strong enough to resist any significant drop on a national level.

“During 2008 we are likely to see more regional variation in prices. There are also signs that demand for new build flats is beginning to suffer in some parts of the country. However, the UK’s chronic housing shortage and growing population will ensure that demand recovers. Consumer and market confidence will remain low until the further cuts in interest rates expected next year are delivered, and there is more liquidity in the financial markets. These factors will have an increased impact on the housing market next year.”