The property market is likely to stay subdued during 2006, the Nationwide Building Society said today.
It was "cautiously optimistic" about the housing market over the coming year, expecting it to be "fairly stable", with prices increasing by between 0 per cent and 3 per cent.
But it added that, following rapid price increases during the past nine years, it would take a long time for property to become affordable again and that this would act as a brake on price growth.
"Our expectation is that house price growth will remain firmly in low single digits in 2006 as the economy recovers," said Nationwide's Fionnuala Earley.
"But affordability will continue to act as a brake until earnings restore the balance. Confidence itself will support prices but is not expected to boost them significantly from here and we expect that they will remain in the range 0 per cent to 3 per cent in 2006.
The group said the market would be supported by demand outstripping supply, with around 30,000 more new households formed each year than new properties built.
At the same time, the economy looked likely to remain benign, with low interest rates keeping debt servicing costs affordable, it said.