2008 'will be a double edged sword'

13-Dec-2007

The combination of falling prices, lower interest rates and buyer uncertainty will contribute to an uneasy market that will nevertheless offer opportunities in 2008, the Council of Mortgage Lenders (CML) has said.

However, first time buyers are set to be among the most severely affected by the "confidence issues" that have materialised as a result of the credit crunch, the CML noted, and this could have the effect of limiting their ability to gain access to the market.

Despite this the organisation predicted that buyers would be "[breathing] a sigh of relief" over the fact that house prices are no longer continuing to rise.

"For first time buyers it is a bit of a double-edged sword really," said CML head of external affairs Sue Anderson.

"On one hand, if the prices come down or even if they just stabilise, to a degree, that is good news for first time buyers; it gives their earnings a chance to start closing the gap between what has been happening recently, where income growth has been a lot slower than house price inflation.

"But, on the other hand, first time buyers are going to be a group who are probably as vulnerable, if not more vulnerable, than everyone else to confidence issues and expectations of what is going to happen.

We will have to wait and see the extent to whether the first time buyers materialise and we will not really be able to tell that for a few months yet, until we see the way in which the market reacts over the post-Christmas period. It will be a while before we can really tell," Ms Anderson concluded.

http://www.firstrungnow.com/news/buyers-reigning-in-luxuries-3625.aspx.


New buyers warned not to get ahead of themselves

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