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Sunday, 28 October, 2001, 04:22 GMT
Terror attacks shake housing market
Sarah Toyne

The terror attacks on America and economic uncertainty are having a profound effect on the housing market, according to a survey obtained by BBC News Online.

New housing data reveals a marked slowdown in both price rises and activity across all regions of England and Wales in the first comprehensive national housing survey published since 11 September.


Fears of terrorism have combined with worries about a pending recession to knock consumer confidence, which in turn appears to have stalled the rising trend in house prices seen over the past five years

John Wriglesworth, Hometrack's economist

Worst-hit are parts of the southeast and London, where prices stagnated or fell during October.

The data from Hometrack, a monthly housing market survey, also indicates that the market has moved more in favour of buyers in many parts of the country.

Nationally, there are almost 20% more properties for sale than active registered buyers, which suggests that further house price falls could be on the agenda.

Worst hit

In general, counties with higher than average property values, and with the most densely populated areas, have seen the most marked slowdown.

With the exception of North Yorkshire, the bottom five performing "small" regions are in the southeast: London and the City, Surrey, Oxfordshire and Berkshire.

Worst hit were properties in central London, where prices fell by 0.8% on average - a marked difference to June when prices rose by 0.7%.

Bottom five performing 'small' regions
Central London & City:-0.8%
Surrey: -0.4%
Oxfordshire: -0.3%
North Yorkshire: 0.2%
Berkshire: -0.2%

Hometrack's latest index, which surveyed 4,000 estate agents nationwide in the month up to October, said that confidence in the economy and fear of redundancy was "rippling-out" from expensive central London areas to the commuter belt.

Estate agents in Surrey reported a "domino effect from London" where prices fell on average by 0.4% over the last month.

The typical price of a three-bedroomed terraced property was 134,500, compared to 138,800 in June - a fall of 4,300.

Why did they fall?
Central London: US events
Surrey: Domino effect from London
Oxon: Few international clients and London buyers
North Yorkshire: Caution in the air
Berkshire: Some fallout from London

Oxfordshire, another county close to London, experienced a 0.3% drop in prices.

A detached property that cost on average 240,700 in the summer, may have sold for only 239,300 in the last month.

Buyers' market

John Wriglesworth, Hometrack's housing economist, said: "Fears of terrorism have combined with worries about a pending recession to knock consumer confidence, which in turn appears to have stalled the rising trend in house prices seen over the past five years."

In many parts of the country, properties have been taking longer to sell than a few months ago.

Price achieved as a % of asking price

In East Anglia it took on average four weeks to sell a property in July, but this has now increased to 4.6 weeks.

In Greater London property, is now taking an average of 4.2 weeks to sell, compared to 3.6 in June.

And the number of properties on the market this month has exceeded the number of active buyers registered by 20% on average.

As a consequence, some sellers have had to drop their sale prices.

Nationally the price achieved as a percentage of the asking price has fallen by 0.7% over the last month or from 97.5% to 95%.

Boom areas

Counties with lower than average house prices - below 117,000 - have been more resilient.

Top five performing regions
Derbyshire: 0.8%
Nottinghamshire: 0.6%
Northumberland: 0.5%
Dorset: 0.5%
South Yorkshire: 0.5%

In Derbyshire, Nottinghamshire, Northumberland, Dorset and South Yorkshire there were healthy price rises of 0.5-0.8% over the past month.

Even in London, there were some differences.

In the southeast prices rose by 0.2% compared to falls of 0.1% in the southwest.

Why?
Derbyshire: Lower relative prices
Nottinghamshire: Strong "buy to let" market, agents' busiest year
Northumberland: Executive, retirement and family homes popular
Dorset: The new Hampshire? Weekend homes to City dwellers
South Yorkshire: Resurgence of new industry, good motorway links
However despite a marked slowdown in price rises Hometrack has not revised its long-term forecast.

Mr Wriglesworth said Hometrack was retaining its forecast of 5% growth in prices for next year.

"Other fundamental factors that determine the health of the housing market remain positive.

"Mortgage rates are at their lowest for nearly 50 years, unemployment rates remain historically low, household incomes are continuing to grow and demographics all point to further house price rises."

 WATCH/LISTEN
 ON THIS STORY
The BBC's Karen Hoggan
"There is no evidence of a collapse"
The BBC's Asad Ahmed
speaks to Mandy MacLean, manager of Terra Cotta estate agents in Cobham, South East England
See also:

25 Oct 01 | Business
Mortgage lending hints at slowdown
08 Oct 01 | Business
Housing market spooked by attacks
03 Oct 01 | Business
UK housing market stalls
03 Oct 01 | Business
The housing market's next move
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