from an article by PAULA HAWKINS

London first big property auction of the year was in the Palace Suite of the Royal Garden Hotel on Kensington High Street on 14th February and was packed to capacity with developers, buy-to-let investors and the odd nervous-looking young couple.

The Royal Institution of Chartered Surveyors says that auctions now account for about 5 per cent of all property purchases in the UK.

Savills’ auctioneer, Chris Coleman Smith, responded to the claim that bargains were harder to find than in last December, by the observation that there were a few that should have gone higher and quoted the £1.4 million for a golf course in northwest London had been snapped up as a great deal.

Other sales included:

A three-bedroom flat in a terraced house in Southfields, southwest London, for just £150,000 (£5,000 below guide price), A two-bedroom flat in Balham, South London, sold for £201,000 (although £40,000 above guide price still considered a bargain for the area.

Guide prices are not always a good indicator as with:

A three-bed family house in Shirley, Croydon,which sold for £163,000 at more than double its guide price and a Grade II listed former artist’s cottage in the Cornish fishing village of Polperro for £265,000, £80,000 above its guide price. At this sale all but two of the properties sold went for more than the list price. Tony Webber form Eddisons, said of their Leeds auction in early Feb: Taking the auction as a whole, the prices achieved on the day have been calculated as 12 per cent above the guide price a clear indicator of the current strength of the auction market in the North East of England where investors were stepping back into the market.The Leeds sale included a Victorian semi-detached house split into seven tenanted flats in Bridlington, East Yorkshire, with a guide price of £100,000-£110,000 sold for £182,500.

The key to a successful auction is preparation, once the property in bought there is 29 days to pay the full amount.

Buy to Let Slows down

The Royal Institution for Chartered Surveyors (RICS) reports that only 13% of CS firms report a rise in demand in this sector and in these cases houses outstrip flats. Nevertheless it is considered as a stable investment market for property speculators with rents increasing in all areas and particularly in London and the North of England. With an element of uncertainty over prices in the house purchase market this sector is seen as having some potential growth. In London, Wales, the North and the Midlands confidence was indicated by 17% of surveyors with predictions that rents would rise over the next three months. Whilst most predictions indicate slowly increasing UK prices in the property market, the Bank of England is expected to again increase the cost of borrowing within the next three months. Any such increase in rental costs could be offset by this rising house prices. Chartered surveyors there were few signs that landlords are bailing out of this market. The proportion selling their properties when tenancies have expired showed little change in the January quarter at 7.0%, which is down from a high of 9.9% in July 2004.

New Build Approvals drop

The Bank of England noted that new Mortgage approvals fell 3.7% for home purchases last year.Once these were seasonally adjusted these were 79,000 less or 3.7% on the previous month and 37.8% lower than the same month last year. In November 2004, they reached a low at 76,000 loans, after restrained market conditions were imposed,since then there has been some easing in these limitations.

The Royal Institution of Chartered Surveyors (RICS) said they did not envisage a significant upturn in the property market in 2005 since a further likely rise in interest rates will reduce buyer affordability.

London New Build Increase

Almost a record as London gets a 31% rise in new build homes in London in 2004. This was announced as the highest in more than 20 years according to new figures from the Office of the Deputy Prime Minister (ODPM). There were 24,123 homes were built in the capital last year - 31% up on the ODPMs 2003 figure of 18,382 and compares with an increase outside London of 3% in the same period.

Mayor of London, Ken Livingstone, said: " New homes remain one of the capitals greatest needs but house builders and boroughs are really starting to deliver."

Housing Price Sensitivities

Housing market Research has shown that a difference of opinion between buyers and sellers is resulting in a stalemate. A Propertyfinder.com poll has suggested that whilst sellers are optimistic about house prices, expecting them to rise 3.5% over the year, buyers are more guarded, expecting a rise of 0.7% and the difference becomes most pronounced in asking prices.

In February 2005, whilst buyers made offers on average 5.2% below asking prices, sellers said they would only accept bids up to 3% under their initial valuation. "Bargain-hungry buyers face stubborn sellers who wont budge," commented Jim Buckle, managing director of propertyfinder.com.Mr Buckle also believed buyers were often asking too much.

Property Surveys

In a buyers market, a survey can be the clincher for any hosung deal. Most experts insist extensive surveys offer peace of mind, but one in five buyers choose one that goes beyond the basic mortgage valuation survey. Clare Matheson BBC News business reporter investigates.

Surveys are too expensive and offer little useful advice. The three main types are:

Mortgage Survey - costs about £200, really just a valuation survey for the mortgage companys purposes to make sure its worth lending you the money.

Homebuyer Survey - average cost £450, advises only on areas of the property that are visible, which means surveyors cannot lift floorboards or knock holes in the wall to check for damp and other problems. Structural Survey - costs upward of £700, gives a true "warts and all" picture of a property.

Stories of hidden defects not detected by surveyors, such as untraced damp, electrical faults or roofing problems. For buyers, who have often already stretched their finances, any major unforeseen problems can be disastrous. While for sellers, there is the problem of surveyors who point to potential problems as a matter of course without giving any indication of its likelihood. "Some reports do say "there could be rising damp, get it checked", but I"m of the view that the surveyor should be making these decisions," Peter Bolton King of the National Association of Estate Agents says. Nevertheless, surveyors insist that being able to recommend further investigation is vital. "We are jacks of all trades," says chartered surveyor Miles Shipside, property expert at Rightmove. "I"m not saying we"re masters of none, but there are specialists and so we do recommend further investigation by a specialist when needed. "Its the biggest investment of a persons life so its worth being a detective and not being sorry in the future."

There are two formal routes for complaints; either via Royal Institute of Chartered Surveyors (RICS) or via the National Association of Estate Agents. An RICS complaint procedure costs £235. If you win more than £3,000, you may be liable for fees up to £1,125. But this is not available for claims worth more than £50,000. Go to the small claims court for claims up to £5,000 - a lower cost legal option

For claims above £5,000, consult your solicitor about legal action, but this could be costly

Just 22 cases went to arbitration in 2001. By 2003, the number had dropped to 20. "Mostly people have to go to court," says Emma Harrison of consumer watchdog Which. But the cost can put people off. For example, if a survey didn"t pick up on the fact you needed a new roof, which will cost £8,000, would you want to fork out another £8,000 on legal action to get your money back? "The biggest difficulty is that a survey provides a snapshot in time", so if something goes wrong, like a crack appears that wasn"t there when the survey was carried out, its the surveyors" word against yours," Ms Harrison adds.

The consumer watchdog is calling for RICS to extend its Scottish Ombudsman service south of the border. Surveys should pick up many prospective problems with a house.

In Scotland, the service is free and covers complaints of maladministration, negligence, incompetence and claims for loss of up to £25,000. This is unlikely to happen as there is already another plan in train to change the system. By late 2006, with the introduction of the Home Information Pack, the onus would be on sellers to get their home checked by surveyors and make any information available to prospective buyers. The government also intends to bring in an independent redress scheme, though critics are not convinced that this will do much to rebuild house buyers" trust in surveys.

Scottish Executive announces every house seller must conduct survey from 2007

The Scottish Housing system will require every seller to conduct a comprehensive survey before putting their home on the market from 2007. The survey, costing between £400 to £700 would then be made available to the prospective buyer. The Communities Minister, Malcolm Chisholm, said,"We believe that the rationale for the single survey remains strong - providing in-depth information on a property to buyer and seller before sale and ending the need for multiple condition surveys".

The effect could ease the uncertainties of high demand markets by providing a definite valuation, as opposed to an offers-over figure, at the outset, thus avoiding being drawn into pointless bidding.The survey may also be an opportunity for sellers to eliminate some barriers to a sale. The successful buyer however would be made to meet the eventual cost of the survey when the sale is completed.

However critics say that this national scheme is based on a pilot that drew just 74 responses in six months of exceptional housing demands. The scheme was piloted in Inverness, Dundee and parts of Edinburgh and Glasgow, covering an area with 293,000 homes. It was scheduled to run for between eight and 12 months and it was hoped that 1,200 surveys would be commissioned. But in seven months only 74 surveys were commissioned - 65 in Glasgow, five in Inverness, three in Dundee and one in Edinburgh. The scheme was adopted by the politiciaans despite this poor response from the housing market.

Mr Chisholm said: "We believe that the rationale for the single survey remains strong - providing in-depth information on a property to buyer and seller before sale and ending the need for multiple condition surveys. We have therefore concluded that we should now evaluate the detailed outcomes of the pilot with a view to introducing a mandatory single- survey scheme."

Graeme Hartley, director of the Royal Institution of Chartered Surveyors in Scotland, said: "I am extremely disappointed by Mr Chisholm’s comments. We believe that this is not in the best interests of consumer choice. Sellers across Scotland have already shied away from the single survey in droves. Surely it would be logical and useful to have robust analysis of the reasons for this lack of interest.

We entered into partnership with the Scottish Executive on the basis that the pilot scheme would be allowed to run and the results would be taken seriously. Sellers across Scotland have turned their backs on this scheme and, by pressing ahead regardless, the Executive is ignoring their views. No thought has been given to how the scheme would work in practice."

Ken Swinton, president of the Scots Law Agents’ Society, said: "We are vehemently opposed to a compulsory single-survey scheme. If it is to have a place, it should be voluntary. If it becomes compulsory, it will mean that, for the benefit of the relatively low percentage of transactions involving first-time buyers, all sellers will suffer by having imposed on them upfront costs in the region of £600 to £700." He warned: "Once sellers realise the cost implications, the minister is likely to face significant resistance and opposition. We will be at the forefront of that opposition."

But Alistair Kinnear, who runs Surveys Online, said: "We are delighted that commonsense has prevailed and that ministers have realised the only way the scheme will work is if everyone adheres to it.

"The pilot was designed to fail because there was no impetus and no effort on the part of selling agents to make it succeed."

The single survey scheme was championed five years earlier by Donald Dewar in an attempt to save costs for first-time buyers who were most likely to be spending thousands of pounds on wasted surveys and bids on properties that were unaffordable.The current changes are to be introduced in the Housing Bill and brought into effect by 2007.

However although the "offers over" advertisement would remain, it is thought that the single survey could reduce the instances of homes attracting a 20 or 30 per cent mark up on their offer price. Ministers have yet to finalise the details of the scheme, but some quarters in the industry may lobby for a guarantee which makes surveyors liable if their survey turns out to have been misleading or at fault.

Mortgage lenders, who currently insist buyers only use surveyors from a pre-approved list, may also have concerns about giving money based on a survey carried out by an unknown surveyor.

Currently one in four buyers face unexpected repair costs of around £3700 in their first year in a new home, while in popular areas, a third of buyers effectively waste hundreds of pounds on surveys that do not lead to a purchase.

Single Survey - Property market views

IAN FERGUSON an expert property solicitor with Glasgow legal firm Mitchells Roberton and council member of the Scottish Law Agents Society responds to the announcement by the communities minister,for a compulsory single survey scheme across Scotland.

His experience of the single survey pilot scheme in Glasgow was of dissapointment when the pilot study results failed to be properly analysed and the decision to impose a compulsory scheme was based on such a low number of returns in the pilot. The Scottish Law Agents Society, is a voluntary body representing solicitors nationwide in Scotland, condemned the compulsory introduction as of benefit to the relatively low percentage of transactions involving first-time buyers, but sellers will have imposed on them additional costs in the region of £600 to £700 to sell their home. Those Sellers who are compelled by money problems to sell their house will be more restricted by this move and may have to surrender the keys to their lender,thus increasing instances of repossession.

There is flexibility within the current scheme where some offers may be lodged "subject to survey".At present there is a choice of a scheme one valuation report, a scheme two report which is a house buyer’s report (similar to the single survey which is effectively a scheme two with a bell and whistle attached) and a structural survey report.

In the new scheme the seller has a reduced choice being bound to provide a survey which purchasers may not wish to accept and rely on and which may have to be renewed if the sale is protracted and unsuccessful. This scheme may be used to pave the way for a sellers’ pack comprising various reports obtained in advance of sale available for examination by a purchaser and lead to problems of multiple title examinations.

Social Housing and First Time Buyers

Michael Chambers, director of policy at the Royal Institution of Chartered Surveyors, said: "RICS is pleased that the government has moved away from granting a simple Right-to-Buy to housing association tenants."

Social housing sector has been selling-off its best stock and there is little new replacement housing resulting in record levels of homelessness and more families being pushed into poor quality private rented accommodation, subsidised by rising benefit bills.

The money currently put into social housing, is too small in comparison to the size of the problem and will continue to add to social polarisation and social exclusion, high crime rates and anti-social behaviour. It is widely recognised that many people on average incomes are unable to get on the property ladder as a result of current house price inflation.

RICS would like to see more help for first-time buyers and in particular a commitment to review the stamp duty threshold, which is currently £60,000.’It welcomes the idea of using government-owned land for affordable housing, but is sceptical about the practicality of building houses for sale at £60,000.

The Nationwide Building Society which is the UK’s leading supplier of funding to Housing Associations, we really welcome the fact that this part of the housing market is getting the sort of attention it deserves.

The National Association of Estate Agents (NAEA) said that the percentage of new buyers fell to a low of 8.9% last year and, although this figure has now risen slightly to 16% as the market cools off, it is still low and at risk of falling again when house prices rise. The overhaul of the stamp duty system was seen as inappropriate where the bottom threshold of £60,000 now includes almost all properties. If the level had been amended in line with house price inflation, it would now stand at over £125,000 a much more realistic level in today’s market.

HSBC has lending schemes for key workers, home buy and shared ownership which includes an indemnity clause effectively giving the lender a first charge over all the property, including the portion not owned by the purchaser. We will also lend on the Right to Buy homeownership incentive which sells a tenanted council property to the sitting tenant at a discount, a spokeswoman added.

David Bexon, chief executive of SmartNewHomes.com,sees a core problem as the imbalance between supply and demand and Government could tackling the housing shortage, by giving industry a strong lead to inspire planning authorities to process applications faster and more constructively.

Wherefore house prices in 2005?

Five leading predictors of the Housing Market for 2005 are summarised below.

Halifax

Nationwide

Hometrack

Capital Economics

Royal Institution of Chartered Surveyors (Rics)

Halifax, the UKs biggest mortgage lender:

Will prices rise or fall during the next twelve months?

Fall.

By how much?

By 2% on average in the UK. After nine years of rising house prices, the average home has increased in value by 160%. Past major housing market downturns have all been caused by a combination of economic recession, steeply rising unemployment and significant rises in interest rates. "There is very little likelihood of a similar combination occurring over either in the short or medium term," the bank says. What will happen to interest rates over the next twelve months? The Halifax predicts they will reach 4.25% by the end of 2005 (currently 4.75%). Did it get it right in 2004? It wasn"t far off. It said interest rates would be 4.5% by the end of 2004.

REGIONAL FORECASTS*

North of England: 1% East Anglia: -3%

Yorks & Humber: 2% South West of England: -4%

North West: 1% South East: -5%

East Midlands: -2% Greater London: -4%

West Midlands: -2% Wales: 0%

N. Ireland: 4% Scotland: 3%

*Halifax

Regional winners and losers?

The north/south divide will narrow further during 2005, the bank predicts. Regions that have seen the biggest price increases over the past year - northern England, Wales and Scotland - are expected to cool down. Modest price rises in Scotland and Northern Ireland are predicted. The biggest price falls are predicted in the South East, London and the South West. Modest falls are expected in East Anglia, East Midlands and West Midlands, returning prices to levels seen in late 2003.

Hope for first-time buyers?

The rate at which earnings are rising will exceed the rate at which house prices are growing. Lower interest rates during 2005 will cut mortgage costs for new borrowers.

2005 overview:

"Fundamentals", namely low interest rates and high employment, remain "sound", the bank says. Lack of housing, especially in the south of England, will underpin the market.

How good is it at forecasting?

Prices have risen by 12.3% so far this year, which is about half way between the two estimates it gave for 2004. In December 2003, it said prices would rise by 8%. It later revised this to 16% in June.

Nationwide, UKs biggest building society:

Will prices rise or fall during the next twelve months?

Rise. By how much? By 2%, the society predicts. But it acknowledges there are increasing pressures on the market. Five interest rate rises have increased mortgage payments. As a proportion of take-home pay, mortgage costs have risen from 24% to 30%. "Negative media comments" have also led homeowners to dampen their expectations of future house price rises. Properties have become less affordable in parts of England, particularly the North, North West and Wales, acting as a brake on the market.

REGIONAL FORECASTS* UK: 2%

North: 2% East Anglia: 2%

Yorks & Humber: 2% South West: 2%

North West: 2% Outer South East: 2%

East Midlands: 2% London: 3% Outer Met: 3%

West Midlands: 2% Wales: 2%

N. Ireland: 4% Scotland: 3%

*Nationwide

What will happen to interest rates over the next twelve months?

The society predicts they will be 5% by the end of the year, with one more quarter point rise expected in the first half of the year.

Regional winners or losers? The North, North West, Yorkshire, and Wales all experienced the fastest price rises during 2004. In 2005, they will experience the biggest slowdown in growth. House prices in these areas are the most unaffordable out of all UK regions. Prices are expected to rise fastest in Northern Ireland and slowest in the North West.

2005 overview:

The key to the future of the housing market are employment prospects, the society says. These are expected to remain good. The housing market will not come to a "full-scale emergency stop" but will experience a "gentle braking". Although it is hoping for a soft landing, it admits this could prove a "false dawn". The doubling of prices over the last four to five years means the housing market is now more highly valued and vulnerable to economic shocks or changes in "buyer sentiment" than in previous years. Uncertainty surrounding economic policy with an election around the corner may also contribute to property falls. What is its forecasting track record? Like the Halifax, its not bad. House prices rose by 13.2% in the first eleven months of 2003, according to Nationwide. This was slightly higher than its 2004 forecast, published last December, which predicted a rise of 9%. Following an unexpected strong start to 2004, Nationwide revised this up to 15%.

Hometrack, a property research company

Will prices rise or fall during the next twelve months?

Neither. On a national basis, prices will stay the same, the firm predicts. 2004 has been a rollercoaster year for house prices. The first six months saw continued price rises before the market turned in July. By November, Hometrack had reported a 0.6% decrease in house prices, the fifth consecutive monthly fall of the year.

HOMETRACK EXPLAINED

A guide to current prices Data is collected from 3,500 estate agent offices from all 2,200 postcode districts in England and Wales The estate agents report whether asking prices are rising or falling

2005 overview:

Prices should continue to fall in the first few months of 2005, by up to 3%. But as the market stabilises, we should see a stronger performance in the last six months and house prices should finish the year in the same shape they started it and therefore unchanged over the year. Hometrack says three key factors will underpin the market - household incomes are increasing by 5% a year, unemployment is continuing to fall and banks are lending more generously.

Capital Economics, Independent economic research company

Will prices rise or fall over the next twelve months?

Fall.

By how much? By 7%.

What will happen to interest rates over the next twelve months?

The firm predicts rates will be 4.5% by the end of 2005. 2005 overview: With valuations now so stretched, Capital Economics believes that recent falls in house prices are likely to develop their own momentum in the months ahead. What is being currently witnessed in the market is the start of a prolonged period of falling house prices. Although the traditionally busy New Year period could yet bring some relief to the market, any upturn is likely to prove both modest and temporary. It believes house prices are 20% overpriced and there will be an equivalent 20% peak-to-trough drop in average house prices. This will put the market onto a more sustainable footing.

Royal Institution of Chartered Surveyors, an industry body

Will prices rise or fall over the next twelve months?

Rise.

By how much? By 3%. It expects the first half of 2005 to be fairly weak as the impact of interest rate rises continues to put off buyers. However, with the economy continuing to display underlying strength, and growth in new jobs, a mild rebound in the housing market is likely in the latter half of 2005. Regional winners and losers?

House prices in southern regions will marginally under perform the national average due to greater sensitivity to recent increases in interest rates. However, the northern regions will not fare much better because of the levelling off of demand, particularly from buy-to-let investors.

ABOUT THE RICS SURVEY

Based on the governments monthly housing index (ODPM) Figures are weighted towards high-value properties, such as London

2005 overview:

The market will remain weak into the first half of 2005 as the full impact of recent interest rate rises is felt. However, the wider economic climate remains fairly good, with consumers showing few signs of being alarmed by the sharp slowdown in the housing market. Buy-to-let landlords have also failed to be panicked by recent price falls and are generally not selling their investments. Employment and incomes are expected to continue rising at a steady pace in 2005 which are likely to provide some support to housing demand and prices in the latter half of 2005 and keep prices stable. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

Regional Variations

The Halifax reveals that the average price of a house in the UK is now more than £100,000 with the highest average price can be found in Surrey, at £345,485, and the lowest in County Tyrone in Northern Ireland at £102,959. County Londonderry (with an average house price of £105,839) and County Armagh (£104,819) are the other two lowest-priced counties, but Northern Irish County Fermanagh saw the greatest increase, rising by 39 per cent to an average house price of £111,187. The 12 most expensive UK counties are all in the south of England, according to the building society, with houses worth an average of more than £200,000 in each. The cheapest county on the UK mainland is Fife in Scotland at £107,919) and South Humberside is also good value in England at £115,375.

Housing Economics: Carrot or Stick

HBOS findings indicate that U.K. house prices declined in February, and adds evidence that the property market is slowing following a five-year boom where some prices more than doubled.

The average value of a UK home fell 0.5% in the month to £162,816, following a revised 0.7% gain in January. House-price inflation slowed to an annual 12.1%,which was also the lowest rate since December 2001.

Following the Bank of Englands November forecast of a period of property decline, in Feb, Martin Ellis, chief economist at HBOS described the outlook as ``extremely uncertain .. and.. continues the mixed pattern of monthly price rises and falls recorded since last summer and is consistent with a gradual slowdown in house price inflation,"" said. The report contradicts a March 1 release from rival mortgage lender Nationwide Building Society, which said house prices rose a more-than-expected 0.5 percent in February. By contrast, approvals for home loans increased a seasonally- adjusted 79,000 in January, down from 82,000 in December and compared with a peak of 132,000 at the end of 2003, the Bank of England said on March 1.

Market Pessimism Confidence among property professionals is low,``We continue to expect that house prices will fall more aggressively towards the middle of this year, particularly if the long-run relationship between prices and approvals remains intact,"" said George Buckley, an economist at Deutsche Bank in London. The prospect of further interest-rate increases may put further pressure on house prices after some members of the Monetary Policy Committee signaled inflationary pressures are building. Paul Tucker, who voted for higher interest rates last month, said on March 1 theres an ``upside risk"" to wages and that the ``downside"" risks to the banks inflation forecast have diminished. Record Employment U.K. employment is at record levels while unemployment is at a three-decade low, helping underpin home values, said HBOS. The lender said an improvement in property prices and the strength of labor markets may ``trigger another rate rise,"" in the coming months. Estate agents are reporting a stabilization in activity, HBOS said, with its own branches reporting increases in agreed sales in January and February. Persimmon Plc, Britains biggest homebuilder by market value, said yesterday demand for its houses has picked up since January and that selling prices may gain 4 percent this year. ``There have been high levels of visitors to our developments, reflecting the pent-up demand from the more subdued market conditions of the second half,"" the company said. The strength of the labor market is providing ``solid support for the housing market, helping to maintain its sound underlying health,"" said Ellis.

From a report by Sam Fleming, Chris Kirkham and Heather Harris.

Alternative Investments: Easier International Home Loans

Charlie McCreevy, the internal market commissioner, outlined the plans to make it easier for consumers to save money on international home loans. He stated that he would be acting on 48 measures suggested last year by financial experts as ways of opening up Europes 4 trillion Euro (£2.75 trillion) mortgage market. Currently only one per cent of the European mortgage market is cross-border or international, a type of mortgage usually needed by those buying foreign property.

Mr McCreevy speaking for the financial forum group wants the national laws on mortgage credit and deed contracts to be brought into line along with those on consumer protection. Some want APRs and early repayment fees to be standardised.He also said that he would amend or get rid of regulations stifling economic growth and impose at least a year-long freeze on new legislation.

"This market and the stock of outstanding loans, accounts for 40 per cent of EU GDP and, if we can open it up, it would be of immense benefit for consumers by bringing more innovation in the sector, coming up with better and better - and cheaper - products," Mr McCreevy stated.

RICS European Housing

The 2005 European Housing Review by the RICS reports that althugh the UK was the only European property market to falter in 2004, strong growth in the first half of 2005 meant UK house prices grew over the year as a whole. From rising at double digit levels in the first half of the year, the UK market saw its fortunes reversed as house prices stopped growing and mortgage demand fell significantly.

The report found property values in France, Spain and Ireland growing by more than ten per cent and only Austria and Hungary had a relatively poor property market in 2004. Germanys long-term stagnant market appears to be picking up as owner-occupiers increase their mortgage demands.In Belgium, Italy, Sweden, Denmark, Finland and Portugal price rises of between five and eight per cent were indicated. The report predicts that 2005 is set to see continued price growth, but with conditions worsening towards the end of the year. Michael Ball,professor of property economics at Reading University and the reports author, explains: "Low interest rates are likely to continue to stimulate housing demand across Europe in the first half of 2005. Yet changes may occur towards the end of the year as pressures for increases in eurozone interest rates grow and new housing supply continues to come on stream in EU markets." But he said there was little likelihood of a housing crash in any European market, even in the UK, which has had a series of housing boom and busts.The British housing market, which has traditionally led the European housing cycle, cooled in the second half of the year because of a rise in interest rates from 3.5 per cent to 4.75 per cent within nine months. Professor Ball said though there was "some risk" of a crash in the UK, a soft landing, in which prices stagnated, was the most likely outcome because of the benign state of the economy.The report also noted a large rise in demand for second homes. In Greece, Italy, France and Spain, between 10 and 15 per cent of dwellings are second homes. Noting "record performance in the second home markets", the report said rising interest rates and a drop in capital gain expectations would mean "some re-adjustment to new realities may be in the offing".Rics said investors looking to buy in the new EU countries of central and eastern Europe should "exercise caution" because while housing was affordable in these markets, many markets were in a precarious state.

A Poll at The Homebuyers Show indicates that almost 40% of potential overseas property investors would invest in emerging markets. These are followed by beach destinations (19%) and existing markets (15%).

Investment is seeking areas that provide long-term growth with high capital gains, such as the Eastern European countries of Bulgaria and Slovakia. Over 25% of the people polled are buying a property overseas for long-term capital gains, with the intention of using it as a holiday home coming in second (21%) and short-term holiday lets third (20%). The majority of people believed that investments are improved by: budget airline destination, membership of the EU (22.41%), new facilities (10.34%), and international events, for example the Athens Olympics, (5.17%) or extensive media coverage (5.17%).

International Property Prices

from an article By Brian Love

The cost of homes is soaring and is one of the more intriguing trends in the economic cycle of countries worldwide, where many fear such a boom is at the point of a crash.

Chinas, economic expansion is a fuel for property investment and speculations while in more advanced economies governments may use property as a GDP driver rather than econmoic indicator. But in many economies real estate and multiple spin-off activities of equipping homes has become such an obsession that it requires market analysis. This has proved difficult and is far from becoming an exact science for home purchasers, professionals, investors, politicians and banks.

Continued low interest rates and borrowing costs has benefitted the buying trends in countries such as the United States, Australia and Britain, and is now affecting mainland European countries such as Spain, France or Poland. The U.K. Royal Institute of Chartered Surveyors said in a report on Thursday Austria and Hungary were the only slack markets of 17 European Union countries apart from Germany, which has a stagnant construction industry still suffering from the reunification in 1990.

South Africa has been one of the fasting-rising markets in recent years, with the better parts of the Soweto townships, outstripping price rises elsewhere which were up 221 percent since 1997, beating most of the rest of the world.

Asian banks have opened private lending to individuals with repatriated money fueling a quadrupling of prime property prices in the Pakistani capital Islamabad. In Shanghai, a thriving Chinese economy boom has driven up a top-grade apartment to $500,000 to double the price of a year ago.

In the United States, soaring real estate -- prices nearly doubled over the last 5 years in parts of the east and west coasts driven by cheap credit and fueling the consumer spending boom of the 1990s.

But politicians and central bankers fear a decline in the property market, none more so than the Bank of England where the British housing market has a higher than average proportion of home owners and high numbers of overseas investors. Spain and Ireland built more new residential property than most other European countries last year but this did not stabalise price rises. France is intending to deregulate its mortgage market to give its housing sector a fresh lease of life.

For the people who set interest rates, there is no easy answer.

The Bank of England has hiked rates to dim the appetite for housing in one of the worlds most boisterous markets. But the U.S. central bank says there is no clear sign of a bubble at national level and the European Central Bank for now believes it can do little more than warn people not to create such a bubble.

Property Expertise

Amendments to EU Directives on Recognition of Professional Qualifications has drawn agreemnt from The Forum of European Construction Professionals. This aim to safeguard the interests of building surveyors and other construction experts working in Member States of the European Union. The draft directive come before the European Parliament for approval in April, and in its current form, the Forum believes will exclude many competent United Kingdom and Irish construction professionals from undertaking design, maintenance and management assignments outside their own countries.

The Forum’s current chair, Jill Craig, head of European policy for the RICS and based in Brussels, is submitting proposals for amendment to the directive which at present would reserve design and supervision functions exclusively to the architect. Kevin Sheridan, FCIOB, past president of the European Council for Building Professionals and vice-president of AEEBC (the European Association of Building Surveyors and Construction Experts) said that the current position affords no recognition to the important role that building surveyors and other construction experts play in building design, refurbishment and conservation, nor to their responsibilities with respect to such matters as the issuance of fire safety certificates and oversight of all aspects of compliance with the building regulations. Mr. Sheridan, who si also chairman of CIOB Ireland’s professional practice and surveyors’ and architects’ sub-committee, points out that many of these functions equally involve building surveyors, and says that in some instances only a minority of architects carry out such work.

A comparison of competences covered by RIBA and the Royal Institution of Architects of Ireland qualifications with those of the RICS and the Society of Chartered Surveyors of Ireland reveals that there is no significant difference between them in the areas of design, technology, the environment and management of construction. In fact, building surveyors have other competencies not common with architects such as structural design and analysis, and building and measured surveys.

FCEP is concerned that building surveyors and others who do not hold the qualification ‘architect’ will be unable to exercise the freedom which Europe’s internal market should give them in providing architectural services in countries where the design function is usually reserved to people specifically designated as architects.This is clearly anti-competitive, says the Forum. It is also an effective discrimination against many competent building and construction professionals from across the European Union who are in the same position as United Kingdom and Irish building surveyors, as the existing recognition rules do not take into account the way that the construction professions have historically been structured in the countries in which they operate.

Objections from Ireland’s Forum of European Construction Professionals, representing over 400,000 building professionals employed throughout Europe, feels that its position has been vindicated by the findings of the Republic of Ireland’s Competition Authority, which after the European Parliament’s first reading of the directive carried out a study acknowledging a number of serious concerns about the registration of architects in Ireland. The authority put forward the following positions on the study of the architectural profession in Ireland:

The design and erection of buildings involves other professionals as well as the architect engineers, surveyors and planning consultants,

Any such registration system could create substantial barriers to entry to the profession,

A compelling case has not been made that restricting the use of the title architect would be beneficial, and that this regulatory intervention is necessary. Competition for architectural services works relatively well, and there is a danger that reserving the title of architect will restrict the provision of such services,

A fundamental issue for architectural services is the proposed restriction on the use of the title of architect. The case has not been adequately made for such a restriction.

The public interest is best served when architectural practices respond to market demands, and clients are able to obtain quality services at competitive fees.