10 September 2007EVERY day more statistics attest to the slowdown in the property market. With pressure building from pricier borrowing and even bigger supermarket bills, pessimists are starting to talk about the potential for a slump. New RICS figures indicate that affordability is at its worst for 17 years and Halifax this week was the latest institution to forecast subdued growth through 2008. However, as our survey of leading estate agents and key economists shows, the mood in some areas remains cheerful. A few brave first-time buyers are spotting the chance to drive a hard bargain; investors, too, are finding opportunities. There is also a resurgence in the rental market in many cities, as families wait for prices to settle. Despite the gloom-mongers, there seems little risk of a slump on the scale of that in the late Eighties and early Nineties.
“Demand in the UK housing market has proved resilient in the face of five interest-rate rises in 12 months. But as people feel the delayed effect of these rises, the outlook is not as buoyant. Demand is cooling and this will be reflected in the moderating of house-price growth. The current financial turmoil is unlikely to have a big impact on the mainstream market, but the combined impact of low earnings growth and higher house prices on affordability, along with less optimistic expectations about future capital growth, will. However, supply remains an issue and will continue to be a supportive factor, especially in London and the South East.” FIONNUALA EARLEY, GROUP ECONOMIST, NATIONWIDE
“We are seeing a lot more activity after a very sleepy and slow month to the end of August. People are out and about even before the schools are back, especially as regards instructions, which this month are at the second-highest level this year as a result of a flurry in the past few days. Although buyer activity overall is more tentative, we are still seeing multiple offers on some properties. Home information packs have had little effect. Most people don’t understand Hips, and therefore they do not affect their decision to sell. The market may have lost a little bark but definitely not its bite.” ANNE CURRELL, CURRELL RESIDENTIAL, NORTH LONDON
“The first-time-buyer market has certainly slowed. I put this down to the interest-rate rises; a quarter-point drop would give more people the confidence to buy. Investors are still there, but they are not expecting to make big returns every year. Properties are taking longer to sell: on average six to eight weeks.” TEARLE PHELAN, ASSOCIATE, KNIGHT FRANK, SHEFFIELD
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