Newspaper article The Journal (Newcastle, England)

North-East Not Dependent on Rest of UK

Newspaper article The Journal (Newcastle, England)

North-East Not Dependent on Rest of UK

Article excerpt

Byline: By Neil Foster

The vital thing to remember when considering the North-East property market is that acts and reacts almost isolation from the rest of Britain.

And while the so-called experts so often talk in gloomy tones of what will happen in areas such as the South-East, we must remember that these predictions are probably not appropriate for this region.

While the rate of house price inflation ( HPI ( is expected to fall significantly, this doesn't necessarily mean that prices will fall.

The rate of HPI experienced over the past two years is unsustainable but there are several reasons why the market should remain level (at worst) or continue to grow slowly (at best).

The most important factor is balance between supply of property for sale and demand from would-be buyers. Following three consecutive years of high demand and restricted supply ( a seller's market ( we expect to see a move towards equilibrium in 2005.

This is unlikely to shift dramatically towards an over supplied and low demand situation ( a buyer's market ( for a number of reasons, namely:

Certain elements of the national press have tried consistently for almost 12 months to talk the residential property market into decline.

In the face of all of this, two national house price indices reported that prices rose again in November 2004 ( traditionally a very slow month for sales!

There are far more reasons for the residential market to remain stable, and possibly to grow slightly in 2005 than there are to support a price crash theory. Let common sense prevail.

Planning controls

Many local authorities have now introduced Interim Planning Policies, in some cases placing an effective moratorium on new house building for the next two years. This will place tight restrictions on the supply of new homes, particularly in rural areas.

Interest rates

While the cost of borrowing may rise slightly in the New Year, the wise money is now backing a reduction by mid 2005. …

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