Earlier this month the Royal Institution of Chartered Surveyors (Rics) caused a bit of a stir by saying there was a one-in-ten chance of a 1990s-style crash in the {a href=" http://cape-verde.assetz.co.uk /"}UK housing market.It was an interesting response to signs that the market is slowing down, but received criticism in some quarters, not least from Peter Damesick, the head of {a href=" http://cape-verde.assetz.co.uk /"}UK property research at CB Richard Ellis.
Mr Damesick said the odds on such a crash were "pretty small" because the economic situation in the early 1990s, when a recession was combined with higher interest rates than at present, was so much less favourable than it is now. Indeed, one might further note that back then the straitjacket that was the Exchange Rate Mechanism, obliging Britain to prioritise the value of the pound against the German Mark above other considerations, is absent now.
Such a point is relevant given the hint this week by Andrew Sentence, a member of the Bank of England's monetary policy committee (MPC), that a rate cut may come soon in the light of the potential effects of the recent liquidity crisis, one effect of which was this month's NOP poll showing a fall in consumer confidence.
But how weak or strong is the market? The question is relevant, for as Ray Boulger of John Charcol said recently, there is a link to buy-to-let (although, as Paragon pointed out this week, there is also a boost to rental demand as would-be buyers duck out of the market).
The Nationwide house prices for September, published yesterday, showed a small increase in monthly price rises to 0.7 per cent from 0.6 per cent in August. Responding to this, Jim Ward, residential research director at property advisor Savills said: "What it shows, in our view, is that the market fundamentals are fairly robust, in that what we're seeing is slowing price growth overall rather than any price falls."
Mr Ward added that the company expected to see a slowdown continue over 2007 and 2008.
"We may see small price falls in some areas where the market's been weakest over the last six months, but nothing of any great import," he added.
That last point raises the issue of regional variation, a factor revealed as significant in the Land Registry figures for house prices in England and Wales in August, which were published today. The figures showed a small rise from 0.1 per cent inflation in July to 0.2 per cent in August. Commenting on the overall figures, the Land Registry commented that: "The 0.2 per cent rate of monthly increase is in line with the downward shift in growth rates that can be seen to have begun four months ago," 24dash reports.
But against these small numbers were larger variations; London saw a 1.5 per cent increase while the east Midlands saw a 1.1 per cent fall. Even in adjacent areas of similar character there have been major variations. For instance, in the Manchester area, the City of Manchester has seen annual house price growth of 10.9 per cent, compared with 3.9 per cent in Salford, which as a contiguous part of the same city region has shared in the apartment-building boom and the wider regeneration of the area.
There is also still a boom in the countryside, immune to the national trends as shortages of stock and high demand, particularly for second homes in commuting distance of London, which has kept the market "buoyant", according to a spokesman for chartered surveyors John Clegg.
Thus the situation of the overall UK property market, far from being the potential disaster that Rics suspected, may just be rather more complex and, as Jim Ward said, "robust" than some imagine, with significant regional variations meaning that those looking to invest could still see continued pockets of growth in some places even if things are much cooler elsewhere.
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