Property Price Rise

At last! Some heartening news for property owners. The Halifax reports that house prices rose at the rate of £100 a day last month. It is the biggest increase for two years and represents a 1.9% jump in house prices. Estate agents report a big leap in the number of people looking to buy a house. Many of them are first time buyers.

But most lenders are still demanding hefty deposits. Others are refusing to pass on Bank of England rate cuts to customers. Such factors are still acting as major brake on sales.

Nevertheless, with interest rates low and sellers chopping asking prices it is hoped that the first signs of recovery in the property market are beginning to reveal themselves.

Before Christmas estate agents were lucky if they sold one house a week. Now they sell two a week on average. Cash remains king. Cash buyers can strike hard bargains. And bargain hunters are out in force. Many estate agents report that buy-to-let landlords are back in the market with a vengeance. They are snapping up cheap properties and are welcomed with open arms by development companies hard hit by the credit squeeze.

Britain’s development companies and builders have seen their share prices plummet. Building sites across the UK have been put into wraps. Companies have been desperately trying to sell off their land banks at prices vastly less than their original book values.

The process of buying is changing. More and more house hunters want to view properties at weekends and in the evenings.

It could be because people are frightened of leaving their desks while giving employers flimsy excuses for their absence. This would be a sign of how unemployment haunts the work place. Unemployment is running at two million and will be three million by 2010.

Estate agents themselves have taken a huge hit. Swathes of agents have been laid off. Small operators who cashed in at the height of the boom have been swept away. Highly geared business – owing money and built on debt – have also disappeared. Blue-chip names have retrenched and taken a cleaver to the number of employees on their books.

With a lot of estate agency competition cleared out of the market the fittest and most able of agents are tipped to have a strong future when the market properly recovers.

Sadly, the first signs of an upturn should not be seen as news that the market has returned to health. A 1.9 per cent jump has to be seen against a backdrop in which there have been ten consecutive monthly falls which have wiped £33,000 off the average house price.