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Should You Buy Property In 2008?

Jan 7, 2008
There's been a lot of talk and media speculation over the last few months about what might happen to the property market next year.

With New Year's Day just a few hours away, this is a great time to take stock and assess the likely movements in the market in 2008, especially if you want to sell or buy property.

An investment company called Assetz has recently studied the market and made a series of predictions for the next 12 months.

The company is likely to know what it is talking about. Its website says it is made up of a number of well known and successful property investment advisors. They offer services to private investors who want to buy property, both here and abroad.

The first issue the company has looked at - and the one that most people are likely to be very interested in - is whether or not house prices are going to go up or down in 2008.

Research by Assetz showed that average house price growth from December 2006 to December 2007 was 8.1%.

The most recent monthly data was more volatile, making the company believe growth is currently somewhere between nought and five per cent. It's likely that people setting out to buy property over the last quarter have been very cautious after a lot of negative media attention.

For the next few months, the company is positive about price growth. It expects the market to settle down, and people will put their homes up for sale as normal.

But what about longer-term? Well, it's confident there as well. Over the next decade and even longer, it expects to see good growth, and says anyone that sets out to buy property now shouldn't be too worried about short-term price wobbles.

That's good news for you as well if you are planning a property sale soon.

What about interest rates? There have been a number of rises over the last 18 months, followed by two recent drops. That's restored a little confidence for homeowners or anyone looking to buy property. There's nothing more likely to dent a growing housing market than increasing mortgage payments.

Assetz believes there will be bank base rate reductions of around 0.75% in 2008. If that happens and you have a base rate tracker mortgage, you will see a drop in your monthly outgoings.

As an investment company, it also looked at whether rents will go up. And it believes they already are according to a number of recent surveys. Figures shows that London rents are already at 15%, and there is likely to be continued growth around the rest of the UK. Good news if you have a buy-to-let; not so good if you need to rent somewhere to live!

It says first-time buyers have dropped from more than a fifth of the market to less than ten per cent. And at the same time people are buying in less volume, but at a greater rate than property is coming on to the market.

That means a substantial number of people are switching from buying to renting, and there is a disproportionate number of smaller households resulting from frustrated first-time buyers who can't get on the property ladder.

Finally, Assetz looked at whether or not population growth fed by immigration would continue, supporting house price growth. And it seems there is going to continue to be enormous demand. Government figures suggest the population will grow by 4.4 million by 2014.

All in, the company believes 2008 is a great time to buy property. It advises people to behave like professional investors, by acting against the market and taking a 10 to 15 year view.
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