Sunday, June 23, 2024

Average house prices may touch 200k in 2006, says Rightmove

LONDON: Property website Rightmove who seem to always look on the positive side of the property market predicts that house prices in England and Wales may touch the 200,000-pound mark in the New Year, well sometime in 2006 at least. This also presumably means that they may not reach the 200k figure of course.

Price growth of just 2 per cent is enough to reach this ‘magical’ figure, Rightmove said, adding in fact the prices are set to grow at 4 per cent during the year. It’s not so magical if your a first time buyer of course who is struggling to afford the deposit or repayments.

This possible growth will be despite the fact that house prices fell 0.8 per cent during the four weeks ended 3 December to 196,181 pounds, as the market is poised for a recovery, Rightmove said. The number of unsold properties with estate agents has fallen from an average of 69 to 65, it said.

Prices have fallen in six out of 10 regions in England and Wales during the four weeks with East Anglia seeing the highest rise of 2.1 per cent while the North of England witnessing the highest fall — of 5 per cent.

Rightmove said affordability norms will affect the price growth and will be limited to the same levels as increases in average earnings during 2006 and beyond. Economic stability, low mortgage costs and high levels of employment will help avoid any price falls.

Through 2006, the housing market would be more positive without peaks and troughs affecting it as in the past two years, the group predicted.

Rightmove’s commercial director Miles Shipside said demand has been outstripping supply in the sector and this has been a substantial factor in pushing average asking prices towards an all-time high.

The group’s assessment comes in line with the study made by mortgage lender Nationwide Building Society, which said house prices would at worst stagnate and at best rise by 3 per cent in 2006.

With residential property out of the SIPPs equation and the economy in trouble, except for the Christmas shopping rush it is difficult to see how any increase in house prices is possible, even with the introduction of REITs.

The main issue remains that property is overvalued by owners and that first time buyers on the whole cannot afford it; they can’t afford the deposit and if they do get a mortgage will struggle with repayments. Without first time buyer movement back into the property market, it remains difficult to see anything other than stagnation as these first timers are required to kick start the chain.

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