First-time buyers are squeezed out while cash-rich investors buy properties free of stamp duty
Property developers and house hunters bid for the best price.

Judith Heywood, TimesOnline.co.uk – 26 Sept 2008

Oil, gold and repossessed property – these are the safe havens being sought out by cash-rich investors as financial markets around the world try to shake off the turmoil of the past two weeks. Bargain hunters are wading into the property market – particularly at the bottom end, where prices and sentiment have been most afflicted – despite predictions from many observers that values have farther to fall and signs of recovery cannot be expected for at least a year. Their ability to move fast to snap up affordable homes on the open market is leaving nervous first-time buyers shut out as they struggle to secure home loans.

Liam Bailey, head of research at Knight Frank, believes that in this slowdown there are signs of an enduring belief among investors that, despite falling prices, a recovery must occur. Jeremy Leaf, an estate agent in North London and the Royal Institution of Chartered Surveyors’ spokesman, says that the plunging values of shares and near-demise of HBOS and AIG will, over the medium term, help to bolster the appeal of property as a safe haven for investment.

Some buyers are showing signs that they expect the market to bottom out sooner than next year, at least in the case of properties being sold off by pressured sellers for much less than their peak value. Last week – in the dark days following the shock collapse of Lehman Brothers and only hours after LloydsTSB stepped in to bail out HBOS – the auction house Allsop presided over the first day of a bumper auction, at which 82 per cent of the UK homes offered sold. The second day, held on Monday, achieved a sales rate of 92 per cent. Gary Murphy, an auctioneer at Allsop, says: “The market is not dead. There is plenty of trade, but the key factor is price.” Full Article