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From Times Online

May 31, 2007

Comment: the property market

Peter Conradi

We’re all used to newspapers having different takes on the same story, but this is ridiculous. “House price boom over?” screams the front page headline of today’s Daily Mail, pointing out that that the cost of property in four out of the 10 regions of England and Wales is falling. Not so, retorts the Daily Express, equally emphatically, under the headline, “House Prices still soaring”. Both stories, needless to say, are based on the same data: the latest (that is, April) data from the Land Registry, the most reliable source of property price information.

Part of it, of course, is down to the editorial policies of the two papers. The Express, when not predicting another ice age or uncovering new Diana conspiracies, is forever talking up the housing market on the (perfectly reasonable commercial) grounds that many of its ageing readers are home owners and therefore see price increases as a “good thing”. The Mail, by contrast, is the kind of publication for which the glass is always half empty rather than half full.

So what is going on? Well, there is no doubt the British property market is slowing, thanks to four interest rates rises over the past 12 year (and expectations of another to come). But these take time to bite – not least because some 70% of people are locked into long term mortgage deals, which means their repayments do not rise immediately when the Bank acts. The market, in the southeast at least, is also being buoyed by all that money still flooding into prime central London from abroad. This, in turn, has a ripple effect both on other parts of the capital and on the market for country houses. Priced out of Mayfair by a Russian or Arab buyer? Then you will have to look in Holland Park instead, driving up prices there. Eventually, though, the effect of the rising cost of money will prevail. Throw in the fact that affordability is close to record lows and it seems clear that for most of us, at least, the boom, if not quite over yet, will be soon.

Having worked in building industry for some 30 years i have seen many changes over the years. House prices are governed by the number of properties that are built each year. We are some 6 years behind on building. The banks have the power to talk up and down prices in housing and the stock market as well. More houses are required until we catch up (never) house prices will always remain higher year on year.

mark gardner, Kidlington Oxford, uk

It is too hard to predict..... as all Brits are now so crazy about buying 'something' whenever lenders are willing to lend. It will take a while before we can really see the real 'fall'. Besides, the economy in Britian is not bad at all at the moment, interest rates rise alone or BTL investors having lower yeild might not trigger a house price slump that easily.

As long as banks willing to lend , borrowers willing to borrow, stable economy, no war, no silly HIPS.... I don't think the price will drop dramatically.

At the end, Brits are being spoiled by 10% growth over the year....... remember property is long term investment and greed will lead to disaster.

ben, manchester,

It is the BTL investors that will take the market down in London. Arabs will keep buying but BTL is the big volumes

Michele, Richmond, UK