Housing market slows, but 'not heading for a crash'

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The housing market is not heading for a crash, the head of the estate agents' profession said today.

Melfyn Williams, the youngest president of the National Association of Estate Agents (NAEA), insisted that the market was just stuck in a "quiet phase".

His comments came as the NAEA published its latest survey showing that both transaction numbers and house price growth had slowed markedly this year.

Its May survey showed national house prices rose on average by 8 per cent over the past 12 months, a figure that has been declining steadily this year from the 18 per cent annual growth in January.

Estate agents clinched an average of 12 new deals last month and nine exchanges of contract. This was more than 40 per cent down on the typical "20 plus" sales agreed and "14 plus" exchanges reported throughout most of last year.

In May, estate agents reported an average of only 48 properties for sale, down from 60 last month.

"We are clearly in a quiet phase in the housing market cycle, with the numbers of both sales and exchanges a long way below their 2002 levels," said Mr Williams.

"However, we believe there is no possibility of a housing market crash - indeed, with many commentators predicting interest rate falls in the coming months, there is a likelihood of stronger house price rises later on this year. This view is supported by the improving demand from buyers."

He said that although the market currently looked flat, the NAEA was optimistic that activity levels would continue to rise. "We won't see overnight recovery, but our agents report an ever improving market, and there is no reason why this shouldn't continue," he said.

The NAEA echoed the major mortgage lenders by blaming a sharp drop in the number of first time buyers, whose share of the total market fell in May to 14 per cent, from 18 per cent in April.

But Mr Williams played down the impact of the shortage of first-time buyers, although he acknowledged that prices were "unaffordable for most young prospective buyers". "Reports from our members suggest that the young are ... choosing to rent instead," he said.