Friday, October 21, 2005

Indian summer for property market

"The UK property market is enjoying something of an Indian summer, with positive signs building as the months go by.

House prices and mortgage searches reached new highs on Moneyextra's mortgage comparison tool in September, while the National Association of Estate Agents (NAEA) reports a return of first-time buyers to the market.

The NAEA's September figures also show an increase in the number of sales agreed, complimenting the latest Bank of England data showing 107,000 mortgages were approved in August - the highest figure since June 2004.

Today it was also revealed that last month £28.1 billion was leant in mortgages, according to the Council of Mortgage Lenders (CML), 4.3 per cent higher than in August and 11 per cent more than in the same month last year.

But while buyers return and mortgage lending increases, analysts remain sceptical that property values are set to climb consistently again.

Rather, this late increase in market activity is generally attributed to the Bank of England's decision to cut interest rates in August and sellers becoming more realistic about how much their properties are worth.

The NAEA's figures show a fall in the average difference between asking prices and sales prices for the first time since July.

But with wages growing faster than house prices, and the public's confidence returning, the market looks set to be steady for some time to come.

'Compared with the same time last year, the prospects are looking healthy. We expect the market to be lively come January,' said the NAEA's Christopher Hall. "

The news about the property market is very mixed at the moment... which is just what you would expect after the strong market of the last few years. We are in a period of consolidation which could last for many months before the market makes a decisive move either up or down - keep up with the economic and property market news to get an idea which way the move will be. Take predictions on house price movement with a pinch of salt and look for evidence.

Chris Bell



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