Newspaper article The Evening Standard (London, England)

WARNING OF HOUSE PRICES MELTDOWN; 1. First-Time Buyers Go on Strike, Waiting for Big Crash, Say Builders 2. FORECAST THAT OVERHEATED MARKET COULD TUMBLE BY AS MUCH AS 20 PER CENT AS FIVE SUCCESSIVE INTEREST RATE RISES SAP THE CONFIDENCE OF NEW OWNERS

Newspaper article The Evening Standard (London, England)

WARNING OF HOUSE PRICES MELTDOWN; 1. First-Time Buyers Go on Strike, Waiting for Big Crash, Say Builders 2. FORECAST THAT OVERHEATED MARKET COULD TUMBLE BY AS MUCH AS 20 PER CENT AS FIVE SUCCESSIVE INTEREST RATE RISES SAP THE CONFIDENCE OF NEW OWNERS

Article excerpt

Byline: JONATHAN PRYNN

FEARS of a looming meltdown in the property market deepened today after shock warnings of a dramatic shortage of buyers.

Two major property companies said their profits would be lower than expected because purchasers are no longer clambering to get on the property ladder.

There is particular concern that increasingly cautious first-time buyers have "gone on strike" until prices start to fall to more affordable levels.

The latest jitters comes the day after a doom-laden report from the International Monetary Fund, which warned of a possible sharp drop in house prices in Britain. Some economists are now forecasting that the overheated market could tumble by as much as 20 per cent.

In its profit warning, housebuilder Countryside Properties told the City that five successive interest rate rises had sapped confidence from an already cooling market.

For the first time, homes at the lower first-time buyer level were starting to be hit, it said. In its statement the company said: "Whilst this has been particularly the case in respect of homes above [pounds sterling]300,000, we have begun to experience a slowing down in market conditions for some lower-priced homes, particularly in London and the South-East."

The statement added: "Potential purchasers are taking longer to commit themselves and are increasingly seeking to negotiate harder terms before proceeding to purchase."

The warning was echoed by Britain's largest estate agency chain, Countrywide, which owns Bairstow Eves, John D Wood and Faron Sutaria. In its Stock Exchange statement, managing director Harry Hill said the number of house sales in the pipeline in August was 20 per cent down on last year.

He added: "The cooler market did continue through August and appears to be persisting into September."

Property experts said the Bank of England's most recent quarter-point interest rise in August, which lifted rates to 4.75 per cent, had been the final straw for many buyers.

This has been exacerbated by gloomy media reports of the latest property price surveys. Christian Walton, marketing manager at London agents Marsh & Parsons said : "Inquiry levels have not ticked up since the summer lull and at the same time a lot of stock has come on the market from vendors who want to get out before things get even worse. …

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