May's price drop was just a hiccup

DO NOT get too depressed by the 1.2 per cent drop in May house prices announced by the Halifax building society yesterday. This reversal, following rises of 1.4 and 1.7 per cent in the previous two months, was half-expected because the recovery is jerking into life rather than making a smooth ascent.

The figures also appear less optimistic than a 1 per cent rise recorded earlier in the week by the Nationwide because they were 'seasonally adjusted' to iron out distortions from the normal surge of buying at this time of year. More falls are possible, but the Halifax still expects a slight overall increase by December and rises in line with earnings next year.

DID YOU wake up this week to the smell of wet paint and hammering on the roof? It could be time to start checking your savings. Strange reports are coming in of sudden interest by landlords in blocks of flats they have not touched in living memory. Could it possibly have something to do with the new laws on leasehold enfranchisement ploughing their way through Parliament?

By the autumn, thousands of flat owners will be able to band together and buy their freeholds. That leaves only a few months for landlords and agents to grab fees and commissions for renovations and decoration. Perhaps I am being paranoid. Maybe they have woken up to their responsibilities, or perhaps they just want to feel needed.

But why are some also working hard to expand these previously neglected assets? Further puzzling stories come in that plans are being prepared for expanding these blocks by building new homes on the roof - one such building would grow upwards by 40 flats. Again, suspicions guide me to the new Bill. If residents exercise their powers, landlords can claim compensation for loss of their buildings. Part of that would involve loss of development rights. So it seems like a wheeze to slap in plans for expanding these blocks, even if they have not a hope in hell of getting planning permission.

Watch this space for further developments. Or perhaps should I say, watch the space upstairs.

ANYONE who still doubts that the Great Housing Recovery is under way should consult the business pages of their daily newspaper, where a crowd of builders can be seen smiling happily over brimming begging bowls.

They are convinced that now is the time to buy land, as the backlog of empty property on their estates is running out. Financial institutions are happily pouring millions of pounds into these bowls as payment for new shares. Countryside Properties, for instance, has just grabbed almost pounds 17m and expects to more than double its sales to 3,000 homes a year.

Potential buyers should take heed. Buried in the annual report by Colin Parsons, chairman of Taylor Woodrow, another major builder, is a palpable disappointment that price increases are unlikely in the near future. To compensate, he is raring to eliminate the recession-beating discounts that have made buying new homes so attractive recently.

AT LEAST one reader will be happy to see the end of the price war after learning a lesson rarely appreciated when buyers move on to new estates. Last July she bought a home in Olney, Buckinghamshire, only to find it was too small. That meant a quick sale, but by then the builder had slashed the prices of neighbouring property, which meant she had to do the same.

'We have lost about pounds 5,000. I do not feel this is fair trading,' she says. 'House prices have not dropped that much. It is now difficult for us to buy the kind of property we would like.'

Unfortunately, that is the way of the harsh business world. Builders had to slash prices to survive. Some of the biggest pockets of negative equity are concentrated on new estates, particularly in the South-east, where owners have found their property devalued overnight because of the launch of some sales campaign.

The reader, who prefers to remain anonymous, might have accepted her fate if she had not been refused a price reduction when she bought and been given an assurance that no cuts were proposed on the estate.

At least she would be protected today by the new Property Misdescriptions Act, which threatens big fines when builders break such promises.