On the brink of a buy­ers’ market?

The Jewish Chronicle - - Classified -

GREAT NEWS IF you are think­ing of buy­ing a house or flat: there is plenty of re­search in t he nati o nal n e w s p a p e r s show­ing how prop­erty prices are go­ing down. This matches the gloomy news from many estate agents and de­vel­op­ers, that fewer peo­ple are buy­ing prop­erty. How­ever, those prop­erty pro­fes­sion­als are still rid­ing high on the re­cent boom. And many of the fig­ures in the news­pa­pers re­fer to the na­tional av­er­age for house prices, which does not re­flect the lo­cal pic­ture.

Five UK house-price in­dices show an av­er­age of 9.7 per cent growth for the 12 months to Oc­to­ber 2007. This is a 0.2 per cent de­crease in the rate of growth from the pre­vi­ous month and a 0.8 per cent in­crease since Oc­to­ber 2006.

The av­er­age house price in Oc­to­ber 2007, based on all five ma­jor in­dices, is £214,795, up from £212,988 in Septem­ber. This shows an in­crease of £1,807 in the value of the av­er­age prop­erty in the last month and an in­crease of £18,657 in the 12 months from Oc­to­ber 2006, when the av­er­age was £196,138.

Some say it was the in­tro­duc­tion of home in­for­ma­tion packs that slowed down prop­erty-price growth in Septem­ber. Many estate agents have yet to be asked for a HIP by a buyer, how­ever.

Prop­erty web­site Right­move recorded an ex­cep­tional drop in house- price growth in Septem­ber, blam­ing HIPs for dis­tort­ing the market. Halifax and FT recorded falls in growth dur­ing the same pe­riod too — but some com­men­ta­tors put that down to prop­erty’s strong monthly gains dur­ing au­tumn 2006.

As­setz pre­dicts that an­nual growth this year will level out at around 8 to 9 per cent. Stu­art Law, chief ex­ec­u­tive of As­setz, be­lieves there is a great deal of pent-up­de­mand­for­prop­erty,es­pe­cially from first-time buy­ers stay­ing in rented ac­com­mo­da­tion, await­ing an op­por­tu­nity to buy amid the cur­rent market un­cer­tainty.

As a re­sult, de­mand for rental prop­erty is now strong and the Royal In­sti­tu­tion for Char­tered Sur­vey­ors re­cently pre­dicted that rental in­comes would con­tinue to grow strongly over the com­ing months (par­tic­u­larly for apart­ments), as the bal­ance be­tween sup­ply and de­mand was al­tered and de­mand for rental prop­erty out­stripped sup­ply.

“This trend ap­pears to re­fute claims that there is an over­sup­ply of apart­ments in the UK, as it would be im­possi- ble to pre­dict such strong rental growth if this was the case,” says Mr Law.

With the base rate at 5.75 per cent for a fourth con­sec­u­tive month in Novem­ber, some fear that ris­ing oil prices may force in­ter­est rates even higher. But there are fore­casts that fear of re­ces­sion will drive in­ter­est rates down.

The Coun­cil of Mort­gage Lenders (CML), for ex­am­ple, reck­ons base rates will drop back to 5 per cent next year. Chris Coates, di­vi­sional man­ag­ing di­rec­tor of Gal­li­ford Try Homes, calls this a wel­come boost to con­sumer con­fi­dence and buy­ers con­cerned about the market, many of whom can­not se­cure a mort­gage in the cur­rent cli­mate.

“De­mand for prop­er­ties re­mains high within the Lon­don com­muter belt and the Home Coun­ties, but five base-rate hikes since Au­gust 2006 have taken their toll on stretched home­buy­ers,” he says. “The South East has seen the great­est prop­erty-price rises over the past 12 months, but with ris­ing rents and pro­posed changes to cap­i­tal gains tax fu­elling in­vestor in­ter­est, first-time buy­ers need to be ready to move quickly. How­ever, af­ford­abil­ity re­mains an is­sue with first-time buy­ers as well as fam­i­lies, driven by the lack of sup­ply of new homes. Start­ing the new year with lower in­ter­est rates should be good news for every­one.”

The slow­down in price growth may en­cour­age buy­ers-in-wait­ing

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