Interest Rate Rises 'Starting to Bite'

Wednesday, June 16 2004 According to assertahome.com, the property website which quizzes people buying and selling property, the balance of confidence in the market 'has tipped towards the pessimists.' It says between January and May its respondents began to feel the pinch of interest rates, and 70% of them now believe recent rises will push the market into a downturn. Additionally, half of the pessimistic respondents now also believe property investors bailing out of the market will contribute to this downturn, compared to just one third four months ago. Jim Buckle, Managing Director of assertahome.com, said: 'Our survey shows that housebuyers and sellers have clearly taken note that interest rates are on the up and this has begun to dent confidence in the housing market. 'Last Thursday's interest rate increase can only accelerate this process. The Bank of England should beware of overly aggressive interest rate hikes.' The site found that the south east of England has shown the most dramatic drop in confidence; it says south eastern househunters currently expect a meagre 0.8% increase in prices, compared with people looking in Scotland who expect rises of 10.9%, and in Yorkshire and Humberside who expect a 10.3% rise. Mr Buckle continued: 'Regional expectations vary widely with those in more northern regions, where the market has been most active, still more confident that southern regions who have seen a quiet market for some time now.' 'The south east is especially gloomy and has been the first region to begin feeling the pinch of higher interest rates.' assertahome.com Bank of England