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NAEA: Market is not crashing in all areas

Thursday, 29 May 2008 7:15 AM

The National Association of Estate Agents (NAEA) has claimed housing data released today obscures the true picture of the UK market.

The latest Nationwide house price index, released earlier today, finds house prices fell 2.5 per cent in April - the sharpest decline in the survey's 17-year history.

As a result, average prices have fallen by 4.4 per cent over the last year.

However, on a regional scale, property is maintaining its value according to the NAEA, the residential sales arm of the National Federation of Property Professionals (NFOPP).

"The national sales figures do not tell the whole story. We know from our members that the picture is still very regional with some areas continuing to do better than others," said NAEA chief executive, Peter Bolton King.

"Indeed, our recent survey of agents records some stability returning to the market in the number of sales agreed, the number of viewings before a sale is secured and the average difference between asking and sales price."

Evidence from the British Bankers' Association finds the number of mortgages issued during April remains at a severely depressed level - following an all time low approval rate during March.

However, the NAEA argues market fundamentals remain strong, with consumer conceptions of the market the real problem.

"The issue here is consumer confidence. It is apparent from our own survey results that some people are adopting a 'wait and see attitude', watching the market, before making any decisions, which is affecting prices," continued Mr Bolton King.

"There is no denying the credit crunch and tighter economic factors have affected confidence in the market but it is still important to remember that the underlying factors that support the property market remain: low unemployment, historically low interest rates and a latent demand for houses."

Transaction levels, however, are likely to continue to fall sharply this year, according to the Royal Institution of Chartered Surveyors (Rics).

"The difficulties in the mortgage market are stretching accessibility and threaten to reduce transaction levels by 40 per cent this year," said David Stubbs, Rics' senior economist.

"With buyers unable to secure financing on reasonable terms, some sellers are now choosing to cut prices.

"The market will only stabilise once transaction volumes recover.

"The government and the Bank of England should continue to implement measures to restore the smooth functioning of the mortgage market, before the drop in transactions and prices begins to really hurt the economy," he concluded.

Chris O'Toole

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