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From The Sunday Times

October 21, 2007

The property market: October 21, 2007

The property-market slowdown

- When heavyweights such as Standard & Poor’s start talking about a UK property-market slowdown, it’s a sign that it is looming. “Conditions now appear ripe for the long-awaited slowdown in the UK housing market,” says the agency, which assesses the creditworthiness of firms and institutions. It says the liquidity squeeze that culminated in the Northern Rock crisis shook mortgage lenders’ confidence, and some potential buyers may find it harder to borrow.

- Meanwhile, Rightmove, the property website, says its index of asking prices on 200,000 homes in the month to mid-October shows an average property in England and Wales on sale for a record £241,612 – £22,000 more than a year ago, and up 2.7% in the past month. “Home information packs and their side effects are straddling a period of record house prices, the highest interest rates for six years and a tightening in lending criteria. This makes it hard for policymakers to read the market accurately,” says a puzzled Miles Shipside, the website’s commercial director. He says homes are typically taking 85 days to find a buyer, the longest period since 2002.

- The National Association of Estate Agents (NAEA) is also baffled. It says the slowdown in sales and registered buyers since the beginning of autumn is sharper than expected – “worryingly so”. The NAEA, which represents 50% of UK agents, says it is uncertain in what direction the market will move for the rest of the year.

- Government figures show that across the UK, house prices rose by 0.5% in August, far less than the 2% increase in July. The Department for Communities and Local Government’s index, based on a sample of completed sales, reveals a typical UK home costs £219,528. The annual inflation figure in August fell to 11.4%, from 12.4% the previous month.

- Don’t expect the market to bounce back soon. Countrywide, the UK’s largest agency, says it is “hard to predict”. Its finance director, Mike Nower, has told Estate Agency News that, “based on the trend of mortgage approvals and the time lag between approvals and exchanges, spring 2008 is going to look tough”.

Graham Norwood