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Assetsure News 31st May 2007   Property Prices Update - Today's newspapers make very interesting reading indeed and only serve to prove that the Uk property insurance market is going through a very unsettled time. One leading daily newspaper reports that the housing boom is over and that in some areas of the country, property prices are now beginning to drop. However one other newspaper says that property prices are continuing to increase despite the recent rise in mortgage interest rates. These articles just demonstrate than nobody seems to really know which way the property market is going to turn next but writing about property & mortgage prices sells newspapers as many of us are eager to find our what is going to happen next. There is no doubt the housing market has cooled, this could be caused by the rise in interest rates, it could also be caused by people not wishing to commit to property purchase at times of uncertainty. There is also a limited amount of property coming on to the market, (unless you want to buy a flat that is) and all of these factors count towards a cooling in the market. Interest rises are decided on by the bank of England monetary committee who are responsible for keeping inflation in check. Whilst this is one of their core objectives they will not want to tip the economy in to recession. There is a correlation between inflation and consumer spending and hopefully if consumer spending drops, the threat of inflation will receded a little and interest rates can stay the same or even be reduced. Being realistic, it is not possible for house prices to continue at the upward pace that we have been experiencing in the last few years. All the signs are for a continued upward trend but at a more gentle pace. If property prices do slip back a little in the coming months, it may only be a temporary blip before prices once more resume on the upward trend. We feel that the market is about to enter a period of consolidation, evidence suggests that consumer spending may be slowing down and this will help interest rate stabilise. Increasing numbers of people have become burdened with personal and business debts not solely related to mortgages and home purchase and an element of caution is entering the markets. People are genuinely worried by some the newspaper reports and prudently are tightening their belts.     back to top   Copyright Assetsure Limited 2007