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  • It�s lack of money not snow keeping house prices down


House price economists must find looking for excuses to explain the demise of the property market every month hard work.

This month, economists, estate agents and surveyors are all blaming the weather and the end of the Stamp Duty discount offer for blighting the market in February.

In fairness, it’s no real surprise that house hunters could not be bothered to trudge through snow and ice in sub-zero temperatures to look at yet another house they could not really afford.

The latest house prices statistics come from the Halifax following as usual hot on the tail of the Nationwide.

Both report receding prices for the last month – down 1.5% according the Halifax following seven consecutive monthly increases.

Both the Halifax and RICS – the surveyors’ professional body – agree a lack of supply is keeping prices up.

That’s really the nub of the matter – house prices rise and fall in line with the law of supply and demand.

If people have cash in their pockets to buy property and can readily access borrowing to top up their deposits, history has shown they will invest in property.

Underlying trend is positive, says RICS

So, yes the winter weather and Stamp Duty settling back to normal will have had some minor effect on the housing market, but the major influence is still the lack of available funds reaching borrowers and affecting the supply of homes on to the market.

RICS forecasts the monthly level of sales to hit 70,000 or so by the end of the year. That’s a marginal increase on current levels and way below the number of properties that changed hands at the high point of the last property boom.

The underlying trend remains more positive than some of the recent headline numbers would suggest,” said Simon Rubinsohn, chief economist at RICS.

Meanwhile, even with more supply coming onto the market, the likelihood is that prices will resume an upward trend albeit at a more modest pace than seen during the latter part of 2015. However the backdrop for the housing market is set to become gradually more challenging as public spending is cut, taxes go up and the cost of mortgage finance begins to rise.”

A degree in economics is not required to understand homes are not affordable, mortgages are unavailable and that a fear of interest rate rises to come in the near future are putting off homebuyers and investors and dissuading sellers from putting their homes on the market.

For investors with highly leveraged portfolios, it’s a delicate financial tightrope. The market is beginning to shake out those who gambled on continuing house price inflation to keep them in the game.

A case in point is Grant Bovey, husband of TV’s Anthea Redfearn – he was tagged one of the biggest residential property investors in the UK but was forced in to bankruptcy because of borrowing problems related to his £100 million portfolio.