House-price conversations used to be off the menu at Christmas. However, the property market’s exuberance — which some have called irrational, but that’s another issue — means that the outlook for 2007 will be almost as pressing a topic as whether potatoes are best roasted in goose fat, or purchased ready-prepared from Marks & Spencer.

The basic points you need to know are: the market is up by an average of between 8 and 9 per cent this year. In 2007, the excitement should abate somewhat, but most property pundits think that there will still be some cheer.

The various predictions are as follows: The Royal Institution of Chartered Surveyors (RICS), the Council of Mortgage Lenders (CML) and the estate agent Savills concur on a rise of 7 per cent. Nationwide is looking for 5-8 per cent, while Halifax expects 4 per cent. Capital Economics has opted for 3.5 per cent, while Hometrack is the gloomiest guru of them all, forecasting just 2 per cent.

Meanwhile, the 2006 price averages mask significant regional differences. The average house price of £187,995 (up 120 per cent, in real terms, since 1996) is a useful shorthand to indicate the market’s strength. But this figure is skewed by double-digit growth in London — ever more “my kinda town” to the global rich. In parts of the North and Midlands, the performance has been desultory.

In 2007, London and the South East ought to maintain their upward momentum, but Northern Ireland will lead the pack, according to Halifax. You may already be familiar with the speculation that values are set improve even further in such übertowns as Sevenoaks, St Albans and Canterbury, from where you can commute to London. But these favoured areas could be overshadowed by their Northern Irish equivalents: Armagh, Carrickfergus and Newtonabbey, within reach of Belfast.

All these forecasts may seem, well, irrational, in light of rising interest rates; inflation is now at its highest since 1996, which makes more expensive mortgages even more likely early in the new year.

But, as Jon Pain, managing director of C&G, Lloyds TSB’s home loans arm, explains, competition between lenders has made millions of people temporarily immune to base-rate moves. This year, the price of the two-year fixed rate loan — 2006’s most popular mortgage — has been below the swap rate. This is the money market rate that determines the cost of this kind of mortgage. One prediction is sure to come true. Switched-on borrowers whose two-year deals are about to expire will be looking to lock into longer-term offers as soon as the fairy lights are unwound from the Christmas tree.

SANTA, BABY

Prospects seem gloomy for those first-time buyers who cannot depend on “inter-generational subsidy”, or “equity export” from parents. But, in 2007, would-be owner occupiers may be able to seek funds from a new sort of sugar daddy.

David Stubbs, an RICS economist, summarises the obstacles facing first-time buyers: the stamp-duty threshold remains at £125,000 and prices are rising faster than incomes. Fionnuala Earley, Nationwide’s group economist, says that many parents willing to help cannot afford the higher deposits that result from rising prices.

All this elicits little sympathy from those who contend that aspiring owner-occupiers have always struggled. In 1990, first-time buyers were typically spending a quarter of their salaries on repaying mortgages; today’s figure is 17 per cent. But note that, in 1990, mortgage tax relief was still available, and that the Government’s current Open Buy shared equity scheme, which should provide targeted help, is not proving effective. This is where the sugar daddy — a benefactor with a strictly financial vested interest — could step in. Savills is examining the possibility of formal schemes whereby a stranger helps you to buy a property for a share of any appreciation. Santa Claus could be coming to town, but don’t count on it just yet.

THE HOLLY AND THE IVY LEAGUE

If ennui with Christmas TV sets in, there is an alternative and I don’t mean You Tube. American websites have videos of fabulous homes for sale, or just sold. At www.ursamajorestate.com/index.htm, you can take a visual tour of the wonderful Modernist-meets-Ponderosa mansion in Bel Air, built for the late Wilt Chamberlain, a basketball star. Or (at www.forbes.com) view the highest-priced properties of 2006, such as the $50 million Palm Beach retreat of the financier Henry Kravis,or Kevin Costner’s $28.5 million Santa Barbara hideaway. A $30 million duplex Park Avenue apartment, purchased by a hedge fund executive, was apparently a “fixer-upper” — which shows that even the absurdly wealthy relish a makeover project.

anne.ashworth@thetimes.co.uk

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