Press Release Summary: It is now accepted across the housing industry and among economists and policy makers that the housing market has slowed down. The questions that are being asked concern not whether there will be high growth in 2008
Press Release Body: It is now accepted across the housing industry and among economists and policy makers that the housing market has slowed down. The questions that are being asked concern not whether there will be high growth in 2008, as might have been asked a year ago of 2007, but whether there will be growth at all and how this will affect buy-to-let.
Last week Nationwide Building Society predicted that there would be zero growth in the housing market in 2008 and today property mortgage website Rightmove made a very similar prediction.
Following the publication of its latest figures showing that property prices fell 0.7 per cent in the month to November 10th and year-on-year house price inflation was down to 7.9 per cent from 10.4 per cent 12 months earlier, Miles Shipside, the commercial director of the site, tipped that \"prices are set to flatline in 2008\".
Others, however, are more downbeat than that. Writing for Firstrung, John Stepek of moneyweek.com said the prospect may be much worse than predicted, saying a zero growth prediction could be \"pretty optimistic\".
This view is shared by Firstrung\'s chief executive officer, Paul Holmes, who said the idea of a gradual slowdown as predicted by Nationwide and Rightmove was \"silly\" and the notion that there would not be price falls in 2008 was \"absurd\".
He added: \"We\'re currently about 30 per cent overvalued. So, I genuinely predict a 25 per cent correction,\" although he said it was hard to say how long this will take. Nonetheless, he predicted, the way ahead was certainly downwards, concluding: \"In 2008, we will see - at best - a crash cruise speed of one per cent falls per month.\"
Yet for all the apparent stormclouds gathering for the residential property housing market, the buy-to-let market is set to hold up well, according to Rob Thomas, the senior policy advisor for the Council of Mortgage Lenders. Speaking at the Mortgage Business Expo, Mr Thomas said that buy-to-let would remain strong for longer-term investors, stating: \"The outlook for the private rented sector is positive as it is based on a growing need for a flexible tenure.\"
In addition, he said, the market was now held in high esteem because of the development of buy-to-let: \"Buy-to-let has given a new dynamic focus to an old market and altered the image of the private rented sector.\"
Rather than any housing market correction, Mr Thomas said the one threat was that of excessive regulation. As an example of this, he cited the deposit protection scheme, which he said was too bureaucratic.
He suggested: \"Rather than using blanket regulation, a targeted approach, such as fining landlords who unfairly withhold deposits, would be more efficient and less costly.\"
Yet issues such as legislation and regulation are matters which, in some ways, can be more easily controlled than the market. It would merely require those making or applying the rules to be persuaded to avoid too much red tape. Economies, with so many conflicting factors and sudden events - the recent credit crunch being an example - are less predictable. Yet in the estimation of Mr Thomas, this second issue and the potential for the residential housing market to face tough times ahead will do little to de-rail the buy-to-let market.
2022
