View more on these topics

Rises slow down but a crash is ruled out

Property market analyst Hometrack is ruling out a 1990s-style housing crash, providing that bank base rate does not double to 8 per cent, but it warns that a smaller rise of 2 per cent could hurt borrowers.

Its August survey shows price rises cooling off, with average growth of 0.7 per cent to £133,000 from £132,863 in July, down for the second consecutive month from peak growth of 2.6 per cent in May.

The level of growth varied around the country, with central London seeing a 0.2 per cent rise to £442,300 from £441,415 while South Yorkshire rose by 1.9 per cent, with the average price now £69,800, up from £68,474.

Despite this slowdown, Hometrack still predicts annual growth of 20 per cent, falling to 7 per cent next year. The firm&#39s economist John Wriglesworth believes a full-scale crash would only come if interest rates increased significantly and unexpectedly from the current 4 per cent.

But he warns that a rise to 6 per cent could signal falling prices and lead to a 30 per cent increase in mortgage payments which would become a major issue for borrowers who have stretched themselves.

Wriglesworth says: “The market will continue to slow, especially at the top end, and we predict a gradual slowdown in house prices next year. Provided there are no significant rate rises, we anticipate no 1990s-style crash. Next year will be a boring market where prices will trot along with about 0.5 to 1 per cent monthly increase.”

Recommended

Rugby stars get help to Kick Start new careers

Glasgow-based IFA Park Caledonia is teaming up with the Professional Rugby Players&#39 Association and the Buzz Recruitment Consultancy to help two international rugby players on to the IFA career ladder. Scottish international Scott Murray, who has played for the British Lions, and Saracens and Harlequins player Alex Codling will work at Park Caledonia&#39s offices as […]

G E Life – Income Option Plan

Friday, August 30, 2002Type: Guaranteed equity bondAim: Income and growth linked to the Dow Jones Euro Stoxx 50indexMinimum-maximum investment: £7,000-£1mTerm: Three years two monthsGuarantee: Capital returned in full provided index does not fall bymore than 20% for option 1 and 30% for option 2Return: Option 1 – 0.78% a month, 10% a year or 33% […]

IFAs see red at big rise in Eagle Star endowment alerts

IFAs are blaming Eagle Star&#39s use of over-optimistic investment projections for 80 per cent of its mortgage endowment policyholders failing to be on target. Its projections for the second quarter of 2002 show 59.4 per cent of endowments are red, facing a likely shortfall, 20.3 per cent amber, facing a possible shortfall, while only 20.3 […]

Fof firms go on the road

Two of the UK&#39s leading fund of fund managers – Credit Suisse Asset Management and ABN Amro&#39s premier funds – are hitting the road this autumn to sell their message to IFAs. Credit Suisse is holding 17 events from October 14 to October 24 in venues across England and Wales, hosted by joint heads of […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment