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Panic movers as prices fall

Wednesday, 9 January 2008 12:00 AM

As many as one in ten UK homebuyers have accelerated their plans to acquire property as prices show signs of moderation.

That is according to research from personal finance advice site Fool.co.uk, which also finds of the people who intend to buy a house three in eight (38 per cent) plan to do so this year.

A further 34 per cent expect to purchase a property in 2009.

"The long-overdue correction in the property market will allow many people who have been waiting to move house to finally realise their dream," said David Kuo, head of personal finance at Fool.co.uk.

The survey - which forms part of a wider study entitled Your Finances in 2012 - also highlights there will be more sellers than buyers over the next five years.

According to Fool.co.uk, for every four people who want to buy a house, there will be five sellers over the period.

The potential correction in property prices follows a period of unprecedented growth in the UK market.

Between 1952 and 2000 prices grew at around an average of eight to nine per cent, according to Fool.co.uk research, however, since the turn of the millennium there has been a dramatic acceleration in house prices.

Over the previous seven years prices have increased by an average of 13 per cent, inflating the market and bringing affordability levels to an all-time low.

Next year could see a correction in these now over-inflated prices.

According to the Fool.co.uk research the value of a typical home could fall by 20 per cent, down to £157,290, in 2008.

Despite this homebuyers are advised to carefully consider what they commit to.

"Quite often people will ask how much they can borrow when they want to buy a property. But that is altogether the wrong question. Instead, they should ask themselves how much they can afford to repay," continued Mr Kuo.

"Instead it is more important to get the correct mortgage and to ensure that you can afford to maintain payments if interest rates rise. Only then can you be sure that your home-owning dream does not turn into a wealth-destroying nightmare," he concluded.

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