The National Association of Estate Agents (NAEA) sees little justification for increasing base rates...
The National Association of Estate Agents (NAEA) sees little justification for increasing base rates to calm the housing market, despite the Council of Mortgage Lenders' concerns.
The latest monthly housing market survey from the NAEA shows during May, sales to first-time buyers increased by 5% to 25% of the total, despite price rises of 19% and the increasingly acute shortage of homes available.
NAEA chief executive, Hugh Dunsmore-Hardy, said: 'As house prices continue to rise, there is talk of the development of hotspots where first-time buyers will not be able to enter the market. Continuing activity at the lower end of the market is an indicator that first-time buyers can still find affordable new homes at the moment.'
He added: 'We still believe the market will run its course and any action by the Bank of England can only be justified if house price rises threaten to take inflation rates higher than Treasury guidelines. Any resulting action should be modest, so it slows the market rather than causing it to falter.'
The NAEA anticipates the market will slow and adjust in the second half of this year, and that the market will moderate itself.
Chris Cummings, Sun Bank's marketing director, agreed: 'It is the first-time buyers that will act as the drag on the market and there is no need to adjust the base rate artificially. At the moment, there is no real difficulty. First-time buyers are older than in the early 1990s, more set in their careers and are better educated ' if they take advice there should be no problems of overstretching.'
However, he recommended caution. 'People should investigate areas, and not get caught in estate agent's hype. We have seen a lot of postcode creep recently, describing places as being near affluent areas to justify prices.'
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