Residential housing market The housing market weakened significantly during 2007 with sharp declines in both output and prices. Most economic commentators had envisaged an adjustment in the housing market because, for a number of years, housing output was well above the sustainable rate taking account of underlying housing needs.
Housing investment peaked at around 13 per cent of GDP in 2006, which was well in excess of international norms. This is likely to reduce to about 7½ per cent of GDP in 2008, which represents a very substantial scaling back of activity. The significant weakening in the housing sector is going to detract considerably from growth this year.