Short supply, a steady economy and demand for property as an investment should keep Britain's housing market on an even keel, despite this month's surprise interest rate hike, housebuilders believe.
However, they caution that prices are unlikely to rise much further and that market conditions could get tougher if the Bank of England signals that more rate increases are on the way.
"If it's a just one-off move, we believe the market will continue to remain stable," said Ian Morris, a spokesman for housebuilder Taylor Woodrow Plc.
"But if it were perceived to be the first in a series of more rises, then that might have an impact on consumer confidence."
The Bank of England surprised economists early this month with a quarter-point rise in interest rates to 4.75 percent, a move that many think was aimed in part at cooling the housing market.
Despite repeated predictions of a crash following a 10-year boom, Britain's housing market has come through a sticky 2005 to register strong price rises this year.
Housebuilders' shares have regained some composure after falling about 3.5 percent in a week after the surprise rate hike. Reassuring comments from Persimmon, Britain's biggest housebuilder, have helped.
Reporting first-half profits at the top end of analysts' forecasts on Tuesday, Persimmon said visitor and enquiry levels had remained healthy since the rate increase.
"(Our) house prices are very affordable. We still have houses below 190,000 pounds and people are buying houses because of affordability," Chief Executive Mike Farley told Reuters.
"The jobs are secure and they need to move because of children or job...and that's the driver rather than a small rise in interest rates."
Demand is also underpinned by a supply shortage and demand for property as an investment.
The number of homes built each year has declined in most of the last 15 years, while the number of households has continued to grow, resulting in only a 1.7 percent surplus in available homes as of 2003, according to the latest government data released in June.
It had more than halved from a 4 percent surplus in 1981 and the problem was most acute in London, which registered a house shortfall of 3.5 percent.
Loans to buy-to-let investors, meanwhile, have grown rapidly, with new loans rising 20 percent in the first half of 2006 versus the second half of 2005 to a new record of £17.5 billion, according to the Council of Mortgage Lenders.
Analysts also agree the market should hold up, but added that this might not be the case if rates rose further.
"A quarter percentage (point) increase is not obviously a welcome but on its own we don't really think it's made much impact on the market," said Roger Humber, Strategic Policy Advisor to the House Builders Association.
"But I think we would become a bit more concerned if there were another quarter percentage increase because...alongside the price of petrol, other increases in bills, and a slowdown in wage increase, it will have an impact on real disposal income."