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Growth in lower-end buying

19th September 2005 | back to article listings BACK    print this article PRINT

New research has shown that property sales are showing signs of growth, with more buyers coming into the market over the last month.

According to a report by the National Association of Estate Agents (NAEA), the property market is beginning to show some signs of recovery, with consumer confidence also beginning to flourish. Experts believe hat the Bank of England's decision to cut rates by a quarter point in August has been the driving factor behind the improvements.

But while one area begins to grow, another has begun to shrink somewhat. A study by Halifax has revealed that million pound properties – which had to a large extent avoided the slowdown in the UK property market – are coming down to earth with something of a bump.

The figures from Halifax show that million pound property deals fell by 26 per cent during the first six months of 2005, compared to the same period last year. While the market is relatively small, the results of the survey are highly important when trying to understand what is currently going on in the British property market.

It appears that, after many years of very high levels of inflation, the UK market is beginning to look towards first time buyers, and is in many ways now favouring the new homebuyer over the experienced investor, as estate agents and mortgage lenders begin to realise that new blood is required if the market is to stop stagnating in the way it has been doing for the past few months.

The statistics from Halifax and the NAEA certainly seem to suggest that there is now a greater emphasis on first time buyers than in recent years, with more properties from the lower end of the market being snapped up, while the more expensive properties are now remaining on the shelf.

But one reason that there appears to be les interest in the million pound market could be because investors are biding their time. Property prices are expected to show further signs of cooling in the coming months, and while no-one is predicting that there will be any sort of property crash, investors are clearly holding off, waiting for the market to bottom-out before venturing in to find themselves a bargain.

Although NAEA President Christopher Hall commented that the market is now beginning to "turn", there appears to remain a feeeling in the higher end of the market that there is still plenty of room for it to conntinue its cycle, and as such most are waiting for the impact from the bottom to begin having an effect further up the market.

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