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Wednesday, 3 October, 2001, 06:55 GMT 07:55 UK
The housing market's next move
Even before events in the United States threw the world's economy into turmoil, most economists thought UK house prices were rising too steeply.
The market was always going to slow at some point.
The only question for home-buyers was when - and by how much.
After 11 September, a slowdown seems more certain than ever - but will it be as severe as some observers are predicting?
"The jury is still out on the long-term effects (of the attacks on the US).
"There is no doubt that enquiries are down. We will just have to wait and see what happens."
Mr Harris described conditions in the market as "really quite extraordinary", with very low interest and a shortage of available properties driving prices ever upwards.
Mortgage rates are at their lowest since the early 1960s.
And they are likely to come down further still as the Bank of England attempts to stave off a recession.
The demands of Britain's hard-pressed manufacturers for lower interest rates seem likely to take precedence in the Bank's calculations.
House prices, it is assumed, will come down of their own accord, as the economic downturn takes hold.
"House price increases will almost cease in the next six to 12 months," Mr Harris said.
"It may even appear that there will be some reduction in prices, even if that comes down to some people's over-inflated idea of what their property is worth."
In London, a shortage of good properties is likely to cushion any downturn in prices, Mr Harris added.
As prices show signs of slowing, people who have been sitting on the side lines may decide the time is right to get into the market.
With professional optimism, Mr Harris said there has never been a better time to buy.
There are still a few bargains to be had for first-time buyers, in parts of East London and the commuter belt, he said.
But prices are still racing ahead in central London and along the Thames Valley, in places such as Oxford.
In other parts of the country, more will depend on wider economic factors such as job security, Mr Harris said.
World events will also be a factor, although some observers think their impact could be over-stated.
One argument is that, in times of uncertainty, people are drawn to owning property.
Another scenario sees an end to unsustainable price rises and greater availability of housing stock, all adding to up to the healthiest housing market in years.
'Fundamentals haven't changed'
Jeremy Peat, group chief economist, Royal Bank of Scotland, was shocked by the unprecedented drop in mortgage enquiries and "footfall" in estate agents' offices after 11 September.
But, he says, things are beginning to return to normal.
"The fundamentals haven't changed really.
"We are still seeing a housing market that is strong in terms of price, where turnover of properties is not so strong.
"Mortgages are increasing significantly, particularly re-mortgaging and buy-to-let."
Flight to property
Mr Peat said he expects house price inflation to "temper significantly" and be "well into single figures" by next year.
At the top end of the market people were taking refuge from the volatile stock markets in property.
This meant there was an increase in buying-to-let.
And although the number of property transactions was down on the same period last year, people were still investing in their property.
Home-owners were spending money on home improvements, and this was driving prices, Mr Peat said.
Fall in prices?
Credit reference agency Experian was more pessimistic about the outlook for the housing market.
The company, which checks credit references for thousands of mortgage applications every week, saw a 15% drop in credit applications in the days following 11 September.
And although business has bounced back, applications remain below the norm for the time of year.
Spokesman Bruno Rost said the attacks in the US had been a catalyst for a slowdown in house prices that was already on its way.
"At best, we will see a plateaux (in prices) for a reasonable period.
"At worst we will see some fairly sizeable reductions," he said.
"One of the key concerns at the moment is the drag on corporate profitability.
"If you don't feel confident about your job security, you are not going to go out and borrow money to buy a new house."
Top end slowdown
Looking further ahead, he said: "We are moving from a seller's market to a buyer's market and from a uniform to a very patchy market."
Prices would continue to grow in more desirable areas, with good transport links and, crucially, better schools.
But at the very top end of the market, in exclusive central London locations such as Chelsea or Mayfair, there is already evidence of faltering demand.
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