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UK property investment is for long term

Tuesday, 18 September 2007 12:00 AM

A large majority of Brits would not sell their homes in the event of a house price fall of 15 per cent, new research finds today.

Rightmove.co.uk reported a fall of 2.6 per cent in monthly UK house prices yesterday, but only two per cent of homeowners would sell their property if prices fell by 15 per cent, according to the Building Societies Association (BSA).

As many as 63 per cent of owners would simply hold onto their property, while 11 per cent would look to sell once prices recovered. A further 17 per cent would look to acquire more property in this scenario, a clear sign of market strength according to the BSA.

The BSA's House Price Expectations report, based on MORI research, finds reassuring signs of resilience of in the UK housing market.

As many as 77 per cent of homebuyers were buying a property to live in, whereas only 45 per cent were explicitly looking to make money.

"For most, the primary motivation for buying a property is derived from the satisfaction of owning a home, rather than the financial motivations of capital appreciation," commented Adrian Coles, director general of the BSA.

"Reassuringly for those critics, the results prove that the majority of buyers have put considerable thought into their purchase, and have entered the housing market with their eyes wide open."

Investors also consider property investment a long term option.

Up to 89 per cent of investors see their property as a form of pension, while the same number also feel in the long term prices are sure to rise.

"Growth in residential property prices has largely been due to a wide selection of factors including low interest rates, lack of suitable housing stock, a buoyant economy and the ingrained desire in the British psyche to own property."

"Some commentators have cautioned that the market may be over reliant on consumers' expectations that prices will continue to rise."

"However, our report puts paid to these fears," concluded Mr Coles.

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