House prices hit the ceiling

As sanity returns to the market, what is the outlook for sellers and buyers?

First-time buyers can celebrate at last. After months of rocketing house prices, particularly in London and the South-east, there are signs that the market is slowing down.

First-time buyers can celebrate at last. After months of rocketing house prices, particularly in London and the South-east, there are signs that the market is slowing down.

Even though house prices have gone up by 15.1 per cent over the past year, according to Nationwide, they are now believed to have reached a plateau. This is welcome news given that a one-bedroom flat in central London is likely to set you back around £150,000.

"Sanity has finally returned," says Donna Bradshaw, director at independent financial adviser Fiona Price and Partners. "Maybe we'll see a bit more balance in the market. It has got to the stage where it has to even out because so many people can't afford to buy properties in the big cities."

However, house prices are still rising in some regions. According to the Royal Institution of Chartered Surveyors, rises are reported in Yorkshire, Humberside and the West Midlands, as the gap closes a little on property prices in the South.

Surveyors in the South-east, meanwhile, reveal that property prices are actually falling for the first time in two years. The south-west of England and East Anglia - regions which enjoyed the boom - have reported a downturn along with London. The East Midlands and North-west are also seeing lower prices.

However, before you get too excited at the prospect of plummeting prices, Ray Boulger, at independent mortgage broker John Charcol, warns that widespread falls are unlikely. "Prices have come off the top in some places where they were well above average anyway," he says. "A more realistic picture than one of falling prices is that the market has stabilised. I would be surprised if we saw further falls."

A property crash is unlikely. Prices are unlikely to fall very far as economic conditions are good, unemployment is low and interest rates have peaked or are close to peaking. The competitive mortgages around at the moment are also likely to continue to attract buyers. Even though the base rate set by the Bank of England is 1 per cent higher than this time last year, mortgage rates are just 0.25 per cent higher, on average, over the same period.

"Two-year fixed or discounted rates are available at 5.5 per cent," says Mr Boulger. "Existing customers with a standard variable rate [7.75 per cent on average] have been harder hit by rate rises but people are moving on to fixed or discount deals."

Despite this, slower demand will still be felt. The drop in the number of transactions and enquiries received by estate agents in recent weeks is set to continue.

According to Portman Building Society, supply is now overtaking demand in many areas. Estate agents are holding houses on their books for longer, while sellers in some areas, particularly the Midlands, are having to accept offers below the asking price.

There is also evidence that home owners are staying put. Rather than moving to bigger houses, they are taking out loans or remortgaging their homes to pay for extensions and other home improvements.

Although first-time buyers have been put off buying in recent months, with prices calming down, now is a good time to get a foot on the property ladder. "One of the key benefits of the change in market sentiment from the buyer's perspective is that a few months ago you would have felt pressured into buying - perhaps paying more than you thought a property was worth. Or you may have bought a property you didn't really like because you were scared you hadn't got your foot on the ladder," says Mr Boulger. "Now the market has slowed down, it has made it easier for buyers not to feel so pressured."

However, it could be argued that buying a home has nothing to do with timing. "A house is where you are going to stay for a while so it is not something you should be speculating about," says Ms Bradshaw. "Over time you are saving yourself rent. So even if house prices never move, when you've finished paying the mortgage you will still be sitting in a house you own, so you have a tangible asset."

She advises that the only time when it isn't good to buy is when you are planning to be in an area for the short term. "You should think of your first property as your home first and foremost. If you are only going to be there a couple of years then maybe it is not a good time to buy," she says.

If you are worried about the re-sale value of any house you buy, it is worth ensuring that you pick a property you are happy to live in. As long as it's in good condition, you should have no problem selling it on if you decide to move.

After all, if you considered it to be a desirable property, it is highly likely that someone else will too.

PROMOTED VIDEO
Extras
indybest
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Junior Quant Analyst - C++, Boost, Data Mining

    £25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

    Service Desk Analyst- (Desktop Support, Help desk)

    £25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

    Junior Quant Analyst (Machine Learning, SQL, Brokerage)

    £30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

    UNIX Application Support Analyst- Support, UNIX, London

    £45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

    Day In a Page

    Air strikes? Talk of God? Obama is following the jihadists’ script

    Air strikes? Talk of God? Obama is following the jihadists’ script

    The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
    Ebola outbreak: Billy Graham’s son declares righteous war on the virus

    Billy Graham’s son declares righteous war on Ebola

    A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
    Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

    Not even Jeremy Clarkson is bigger than the BBC, says TV boss

    Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
    Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

    Nick Clegg the movie

    Channel 4 to air Coalition drama showing Lib Dem leader's rise
    Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

    Philip Larkin: What will survive of him?

    Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

    Waxing lyrical

    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
    Texas forensic astronomer finally pinpoints the exact birth of impressionism

    Revealed (to the minute)

    The precise time when impressionism was born
    From slow-roasted to sugar-cured: how to make the most of the British tomato season

    Make the most of British tomatoes

    The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
    10 best men's skincare products

    Face it: 10 best men's skincare products

    Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
    Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

    Mackay, Moody and another grim day for English football

    The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
    La Liga analysis: Will Barcelona's hopes go out of the window?

    Will Barcelona's hopes go out of the window?

    Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape