KATE Barker is not just any old economist. She sits on the Bank of England’s Monetary Policy Committee, which sets interest rates, and is also the author of a compendious government review of the housing market. So when Ms Barker talks about property prices, we should hang on her every word.

She believes the market is “somewhat vulnerable to a major change in expectations about future prices”. But, as she outlined in a speech this week, there seems “no firm evidence of a major slowing in house price rises” – despite the gyrations of financial markets. Consumer confidence is strong and unemployment is not expected to rise.

So far, so good. But Ms Barker has also been observing the behaviour of buy-to-let investors who took out fewer loans to purchase properties in the first half of 2007. In recent years, buy-to-let investors have been snapping up the cheaper properties that were once the preserve of first-time buyers. If the former opt to stay on the sidelines and the latter still cannot afford to become owner-occupiers despite the weakening of prices, then this would be bad news.

Ms Barker declines, however, to forecast how buy-to-let investors will react next. This is not a cop-out, but an acknowledgement of human nature. Few owners of any type of property respond in an entirely logical way, based on an assessment of the direction of the market and interest rates. The spreadsheet mentality has yet to permeate the relationship between amateur landlords and their properties.

BACKGROUND

• Opening bids - Is it Christmas already? Tell Santa to break out a rate cut without further delay?

• Which economists will win the contest to be the gloomiest over the future for prices?

• Which camp are you in - storm clouds or showers? Even the experts are split

• Opening bids - a year in property

BACKGROUND

• Opening bids: Why the Government must do something about Britain’s empty properties

• Will there be a rate cut before Christmas? Kate Barker knows - but she’s not telling

• Downturn and downtown in 2008: how investors in UK city-centre flats may feel the chill first

• Opening bids

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• Comment: The housing shortage

• Ripple effect from Belgravia to the suburbs

• Comment: the property market slowdown

• Tax perks for a few are adding to the property have-nots’ sense of injustice, but don’t expect reform any time soon

• This was not a timely retreat. What does the government now mean to do to save the planet?

The silencing of our Mr Spocks

Our public administration has specialised in low-level, chronic inefficiency with a counterpoint of big talk

BACKGROUND

• Average prices in the South are 1.59 times higher than the North

• The City’s ardour for status homes remains unabated

• The dawn of a more eco-conscious Britain may be delayed

• It's bonus time, let the stampede begin

• Prices and politics either side of the border

Hips will make us greener, or so the Government says

• Hips have already won hearts and minds and will make us all greener, or so the Government says

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• Mortgage competition makes millions immune to base-rate moves

• Hidden costs of a place in the sun

• Primark Principle revises gloomy views

• Going green is not cheap

Next April, the tax on the profits from the sale of a rental flat could be just 18 per cent. As Capital Economics points out, this would be an incentive for buy-to-let investors, who are pessimistic about prices, to make a swift exit. But there is no guarantee this proposed concession will become law. Meanwhile, tenant demand remains good, although rents are flattening out in some parts of London and elsewhere, following sharp increases. Capital Economics also says that: “the strength of past gains means many buy-to-let investors would be relaxed about some mild losses over the next few years”. They are focused on the long-term, seeing the flat they rent out as a pension pot.

What everyone would like to hear is whether Ms Barker thinks interest rates should fall now. On this subject, she is silent, but others have read between the lines. The message seems to be: no rate cut before Christmas. February now appears to be the earliest date.

THE WAITROSE EFFECT

The right kind of food store increasingly adds to the appeal of a neighbourhood. The recipe for such a retailer includes a sustainability commitment, ready meals that aspire to a Michelin star and, as one blunt estate agent put it: “no obese customers in the aisles”. Frequent sightings of (slim) celebrities in those same aisles are a plus, but not essential.

Waitrose, more than any of its rivals, seems to embody these qualities and its presence can be key to a location’s reassessment. Knight Frank reports that US and other corporate tenants priced out of Chelsea are now happier to settle instead in more challenging Wapping, in East London, thanks to the “Waitrose effect”. This is the diametric opposite of the Tesco effect. The British may be more than happy to spend in an existing Tesco, but view with dismay plans for yet another in their locality.

Andie MacDowell, the film star and the face of L’Oréal, has been recently spied in the Wapping Waitrose, formerly a morose Morrison’s. The more regular shoppers include staff of The Times, for this is our local supermarket.

The irresistible lure of the mixture of organic venison sausages (high in omega3 fatty acids) and celebrity can be seen in the rise in property prices in Daylesford, a village on the edge of the Cotswolds, and its surrounding locations. The Daylesford Organic shop, with its decor of pale woods and cheese from its own creamery, attracts a distinctly nonobese clientele, such as Elizabeth Hurley.

All this probably means that a formal study correlating the level of property prices in different areas, with obesity levels, density of Waitrose stores and organic fare, is probably under way somewhere.

A MESSAGE FOR WHITEHALL

The Bricks and Mortar e-mail inbox usually contains only pictures of immaculately maintained houses. But images of decay and dilapidation have been appearing, after our report last week on the scandal of Britain’s 840,000 empty homes. Readers have sent us snaps of vacant and neglected dwellings down their streets, properties that could be made viable if local authorities would only assume proper responsibility for this issue.

One blogger from Croydon has set up a website (www.croydoniscrap.com) to ensure that his borough’s empty homes do not remain blots on the townscape but become part of the solution to the housing crisis. Whitehall has plans for 3 million new homes by 2020, but it cannot afford to forget that a good proportion of these homes are already standing. anne.ashworth@thetimes.co.uk

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