Homeowners told not to fear crash

HOME-owners have been told to expect house prices to continue to fall over the next few months, but not to fear an all-out property crash.

Property market analysts Hometrack said house prices fell by 0.6% across the UK in October – the fifth monthly drop in a row – as higher interest rates and falling demand continued to cool the market.

The average house price has now fallen by nearly £2,000 since June to £165,800, with the number of buyers registered with estate agents dropping by 3.8% since September.

Hometrack's housing economist John Wriglesworth claimed the property market has reached the peak of its current cycle, leading to a softening of prices.

He said: 'House prices are likely to drop further over the next few months due to the current excess supply and the expected seasonal fall-off in the number or prospective buyers.'

He added: 'We see no sudden or significant prospective downturn. Much lower interest rates compared with 10 years ago, strong rises in household incomes, lower unemployment and lenders now willing to offer larger mortgages relative to incomes all point to a levelling-out of house

prices.'

Hometrack's figures further fuels the debate of whether interest rates have peaked. Falling house prices and economic growth suggest the Bank of England will tag the base rate at 4.75%, but soaring retail figures

indicate that fresh increases are still to come.

Last week the Royal Institute of Chartered Surveyors warned house prices are falling at their fastest rate for nine years, while the Building Societies Association said mortgage approvals – loans agreed but not yet made – had dropped to a three-year low.

Wriglesworth predicted base rates would average 5.25% in2005, despite Hometrack's figures suggesting the market has peaked, with 0% house price inflation during the year.

Agreed sales for October fell by 1% and the average time taken to sell a house rose to six weeks from 5.8 weeks in September.

The largest price falls occurred in Avon and across the whole of London, with North London faring particularly badly.

The October report claimed 'media scaremongering' was contributing to falling prices by creating consumer inertia.

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