Rate rises cool house market by Finance News Bulletin

Published: 28/03/07

News Companies & markets Investing Power collection Campaigns Mortgages & homesMortgage featuresInsurance Consumer advice Broadband & phones Retirement economy & banking Credit & loans Small business duty & wills Message boards Money blog Tools & calculators Ask an specialist Guides Compare & buyHouse cost inflation cooled for a third consecutive month in January as purchaser demand fell back in the countenance of higher interest rates, a report today indicated

TAKE PART IN OUR SURVEY Tell us what you think of This is cash and help shape our future (you could even earn £35)A ONE-MINUTE MAKEOVER If you only have one minute to learn how to kind your finances, forget the rest and understand writing this>> Our 8-step planThe Royal Institution of Chartered Surveyors (Rics) said 28% more of its members reported a go up in prices than a fall in January, down from 366% in DecemberFigures show home prices rose for the 15th consecutive month but that the speed of increase eased back to levels last seen in June last year

But the rate of enlargement seen in January is still above the the long run standard of 21%, with a lack of housing provide helping the market as it attempts to shrug off recent interest speed hikesThe number of unsold properties on surveyors' books declined to the lowest level for almost two-and-a-half years, Rics saidBut in an indication that the market is weakening, new buyer enquiries were detained back in January by recent bottom rate risesThe study is regarded by economists as one of the most reliable early indicators of possessions market trends

Rics said insist is likely to weaken further in the pending months as last months interest rate decision filters through to a further deterioration in buyer affordabilityCompleted possessions sales rose to their highest levels since May 2004, reaching 298 per surveyor, up from 273% in October

The ratio of completed sales compared to available stock rose from 431% to 462%, almost 10 percentage points higher than the review's long run averageAccording to the survey, strongest house cost growth was again witnessed in London and the South of England

In the North and the Midlands enlargement has slowed markedly, while markets in Scotland and Northern Ireland remain robustDespite interest rate hikes, inspector confidence in price outlooks remains strong with tight supply conditions ongoing to boost hopefulnessJeremy Leaf, a spokesman for Rics, said: 'Interest tax rises are having the desired impact of stabilising the marketplace The Bank of England's hawkish activity has deterred some buyers who have started to hesitate before taking the possessions ladder plunge

'He added: 'However, a strong financial system provides a platform for modest house cost rises particularly as would-be buyers face an ever diminishing option of property on the market'Higher interest rates will make life more difficult with amount overdue expected to rise, though there are few signs that the market will take a significant turn for the most horrible'Despite calls for more housebuilding to ease problems suffered by first-time buyers, administration figures released today showed completions on newly-built homes in England rose by now ½% in 2006 According to the Communities and Local Government figures, new house building starts in 2006 rose by 3% to 183,140, but completions rose by now ½ to 160,230

Figures for the final quarter of the day showed am 11% rise in building starts on the same era during 2005, but completions cut down by 11% - due to a relatively high level in the last quarter of 2005The number of new homes being built waterfall substantially below the Government's targets and completions rising only slightly during a day of strong housing activity support have added heaviness to critics' claims that developers are building the incorrect kind of homesIn reply to Philip of West Sussex The fascination of owning a possessions is admittedly very strong in the UK

The only obsession you are trying to buy is security (owned assets) in the distant future at the price of insecurity (debt) now The question you should ask yourself is, is the property you desire to buy really worth x years of take home pay My personal sight is that I would get more value expenditure all that money on holidays/experiences than trade a prperty at todays prices Common sense and fundamentals will eventually no-win situation up

how the market/house prices will react is anyones guessUK interest tax are too low

Inflation is well above aim (3% last and 27% this month - aim is 2%) The money supply (+ ~14% YoY) is very high Interest rates need to rise to manage this

If interest rates rise to 6% then the accommodation market will fall, based on easy affordability of mortgagesCut taxes and lift interest rates That way poeple can afford the higher mortgage payments, and would get to spend their own money rather then some bank's which has to be paid back with interestHigher interest rates would deter the pay money for to let brigade, allowing more property for the deprived, rather than the greedy

Funny how the banks are fairly happy with the way things have been for the last few years, along with surveyors, lawyers and estate agentsIt is very strange to hear that the land is an issue seem at the new properties being built They will have a house similar to 7*8 meters at most, but they will also have another 10-15*8 meters of a "backyard"

This is ridiculous In a short period of time owners will attempt to build conservatories etc on this land anyway, why not construct normal sized properties in the first place I would do with a smaller backyard - just enough to put barbecue in

Also inspite of all these "revelation" articles in the main journalists re: basements and how good it is to have one (who would have consideration) new homes still have nothing like that, althouth it is clearly cheaper to build cellar before, not after the house is in place The building industry and ultimately the administration that allow them to use the available space in a worst possible method are the sorce of the problemI ve always been unenthusiastic, fear the worst and anything better is a bonus

But, with property, I cant see there would be a reverse in prices Someone said to me "they put on't make land any more" and it's true Land is a commodity With an increasing inhabitants, migration and immigration pretty much beyond the government's control what method can house prices go

These people require some where to live all right, there may be a small corection from time to time, but what will that be 5%, 10% What difference does it make

Only if you have to put up for sale it will you realise the loss, if you had to sell it where would you live You could see a drop in prices as a nonsense and scare mongering I do have the same opinion you need to look at property as long word though, but do look at it long word find a chart which charts price over the last 30 years, it only goes one method

Same as the stock market, this only goes one wayI have been saving for a put for over 3 years I have c£15k saved, but my prospects of owning a possessions are worse now than they were when I have zero saved

With all but one of the respondants commerce dependant on the continued rise of the housing market, can we be astonished that no-one is predicting a fallSurely for every being who releases equity and boosts consumer expenditure, there is another who is mortgaged to the hilt or saving every currency for a deposit, thus have little spending money I for one sense like I have to save every penny to keep up with the increasing cost of housing so I tend to spend very little elseI don't buy into the hypothesis that more affordable accommodation would mean economic meltdown, quite the opposite

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