National market comment

We have commented in the past about the reliability of house price indices and how they can show significant variations. However, over a long period, if the majority of indices show a similar trend, it is reasonable to place reliance on that trend.

There is a general consensus that the market has shown little movement one way or the other over the last two years. We anticipated that, after the rather dull spring market in 2005, activity would pick up. This was undoubtedly the case, and the autumn showed increased activity, with buyers feeling more confident that prices were likely to increase and that their purchase would prove to be a good investment.

Whilst the investment aspect of a purchase is relevant, we are in no doubt that the real interest is in the quality of the property itself. If the property suits the purchasers' requirements, they will feel confident that they will retain it for a number of years. History has clearly demonstrated that, over a long period, house prices increase very favourably.

There have been accusations in the past that estate agents can be the architects of rising prices. However, if a house is fully marketed at the correct guide price, the buyers will determine the price it fetches. Agents cannot manufacture bids. At the other extreme, the Association of House Builders has recently accused agents of causing the market to stagnate by quoting unrealistic prices. This would seem to be an unlikely practice when agents are dependent on the houses selling to earn their fee.

We are confident that, with the stock market performing better than for some years and the interest rate trend likely to be steady, the market is set fair. The one blot on the horizon would seem to be the Government's determination to force through the implementation of Home Information Packs in June 2007. These will increase the cost of selling a property and increase the time it will take to prepare a property for the market. This time factor could well outweigh the perceived speeding up of the legal process.

The moral for this year is to be positive, both as seller and buyer.

Savills, 27.03.2006

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