Lack of supply limiting buyers' options

Posted: 09 Sep 2008 13:17:55 GMT

The lack of housing in this country means that even if property prices stabilised, house buyers would not have access to a great deal of choice.

That is the sentiment of Jon Neale, head of development research at global property consultant Knight Frank, who went on to urge the government to cut interest rates to encourage activity in the housing market.

"There is a period of intense stress at the moment by general chaos in the financial markets. There are vey unusual predictions in terms of access to credit and so on," he explained.

"At some point people will want to start buying homes again and they'll discover there is a shortage out there when prices go up again because demand will outstrip supply."

According to the latest house prices report from Nationwide, the cost of a typical home fell by 1.9 per cent in August, bringing the annual fall over the previous 12 months into double digits for the first time since 1990.

However, the report did suggest that some degree of confidence is returning to the market, with 44 per cent of borrowers feeling more likely to consider a fixed-rate mortgage now than they would have a year ago.

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