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Don’t get carried away by Property Prices

Nationwide have just released their latest house price report showing that prices have fallen for the fourth month in a row.

The annual rate of house price inflation was 2.7% in February, down from 4.2% in January, and the lowest since November 2005.

The good news is that they go on to suggest that “It is encouraging that the outlook is one of … slower economic growth rather than recession”.

No-one should really be surprised by these figures, but it is important that everyone, especially the media, lenders and valuers do not start to get twitchy and blow things out of proportion. A correction has long been on the cards as part of the natural economic cycle, but what we want to avoid is people jumping on the bandwagon and valuers downvaluing to be on the safe side.

Properties are still changing hands at good levels and demand is not as short as some people would have you believe.

Lenders also need to be careful not to contribute to slowing demand too much by scaling back to far on lending criteria, loan-to-values and by increasing rates. All this combines to have an effect on consumers.

posted @ Friday, February 29, 2008 12:13 PM | Feedback (0) |

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