Division over housing 'recovery'

Views are mixed on the direction of house prices

The recovery in the UK housing market was strong enough to survive the traditional summer slowdown, says the National Association of Estate Agents.

It said that sales, and the number of potential buyers registering with an estate agent, were up in September compared with the previous month.

It regarded the figures as "a source of optimism".

But credit ratings agency Fitch Ratings said that recent house price rises were a "temporary respite".

It estimated that property values would fall by a further 17% as a result of increasing unemployment and a lack of mortgage availability.

Sales

The NAEA, which represents estate agents, said that the average number of house hunters registered for each branch increased from 238 in August to 294 in September.

The economic fundamentals do not auger well for a sustained strong recovery in the UK housing market Alastair Bigley, Fitch Ratings

The average number of sales per branch rose from 7.6 in August to 8.5 in September.

But the proportion of first-time buyers dropped and the average number of properties on the market - a key factor in recent price rises - also dipped.

The group's president, Gary Smith, called on the government to extend the stamp duty holiday to help continue the recovery. Properties priced between £125,000 and £175,000 will only be free from stamp duty until the end of the year.

Both the Nationwide and the Halifax have reported that UK house prices rose in September compared with August, by 0.9% and 1.6% respectively.

But Fitch Ratings argued that prices would drop again - eventually leading to a total fall of 30% from their peak in October 2007.

"Despite the fact that a global economic recovery is under way, the economic fundamentals do not auger well for a sustained strong recovery in the UK housing market," said Alastair Bigley, head of UK residential mortgage-backed securities at Fitch Ratings.

The ratings agency said that, with the average UK salary at £25,000, saving for a deposit was tough for first-time buyers and would stifle demand for housing.