Recent reports from The National Association of Estate Agents (NAEA) and Rightmove.co.uk show that the housing market is now slowing down. In fact the report by Rightmove reveals that August 2007 showed the biggest slowdown in the market for 18 months.
Both reports indicate that, following the recent interest rate rises, homeowners are beginning to struggle to meet increased mortgage payments and rises in general household spending.
Whilst the general trend in house prices is still upward, 0.6 per cent in August, some areas in England and Wales actually saw prices fall, most noticeably in the West midlands where prices have fallen by on average 2.2 per cent in the same period.
More worryingly the number of buyers registered with estate agents and properties on estate agents books both fell dramatically in July and August, in some cases to levels normally only seen during the traditionally "dead" period over the Christmas holidays.
This combined with the reduction of suitable housing stock has led the NAEA to be concerned that the ongoing implementation of the Home Information Pack could lead to further adverse effects for the housing market in the months to come.
In fact following the August 1st launch of HIPs, where the pack was only applicable to 4 bedroom properties, agents reported a noticeable reduction in four bed properties being brought to the market. As the HIP is now applicable to three bed properties (from the 10th September 2007) there is also a strong expectation that this will lead to additional future shortages of three bed homes.
What this means in general terms is that for the first time in at least four years there has been a switch in power from the seller to the buyer in many parts of the country.
This switch could be even greater as the recent housing market crisis in America and resulting fallout across the European banking system means that, as the "credit crunch" tightens, UK lenders may not be able to offer mortgages at rates seen in previous months meaning increases in mortgage rates by some lenders even without an interest rate rise by the Bank of England.
While all of these market forces prevail, it is widely recognised that the UK housing market is in desperate need of a period of stability in interest rates if it is to have any chance of continued growth at anywhere near previously seen levels. Ultimately only time and the Bank of England will be able to answer this question!
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