Many financial experts are expecting that ‘08 is the year that Britain heads into a recession - and following on from the recent credit crunch many are expecting for the next 12 months to be tough. In particular the sub-prime mortgage market is struggling, with some specialist brokers closing as a result.

However while some sectors may continue to suffer, there will be others who use the next 12 months to their advantage. The ongoing decrease in property prices will mean that it will be an easier year than 2007 for First Time Buyers to get on the property ladder. In December for the second consecutive month property prices dropped, with many experts expecting this trend to continue throughout the year. With 2007 seeing the average house price ‘peak’, many potential homeowners found themselves unable to afford a property - the number of First Time Buyers purchasing a home was at the lowest it has been since 1980.

Aside from a decrease in property prices, interest rates are also predicted to fall in 2008 - allowing FTBs to afford a property. However, lending criteria will continue to be strict following on from the credit crunch.

House prices in the UK are predicted to drop by 10% next year, according to Morgan Stanley.

With early signs of a slump in the property market, 2008 could see an end to the UK’s property boom which has lasted for the last 10 years, as a result of banks enforcing stricter lending criteria and the slowdown of economic growth.

A drop in property values could result in many homeowner’s properties being worth less than the mortgage secured against it, known as ‘negative equity’, and may lead to an increase in number of repossessions.

It is estimated that by the end of next year, property values will have decreased to the prices where they were at the end of 2006