Released on: November 12, 2007, 10:02 am

Press Release Author: Jim watson

Industry: Real Estate

Press Release Summary: Investing in London property in the UK might look like a bit
of a risky undertaking just now, with the slowdown in the housing market since the
last rate rise in July.

Press Release Body: Investing in London property in the UK might look like a bit of
a risky undertaking just now, with the slowdown in the housing market since the last
rate rise in July, uncertainty about when interest rates will come down again, the
credit crunch and a fall in UK mortgage borrowing.

House price inflation is a particularly uncertain area at the moment. It has seemed
clear enough in the last few months that the market has slowed down, but alarm bells
began ringing in some quarters this week when October house price figures from
property website Hometrack showed a 0.1 per cent fall in prices in England and
Wales. This, combined with the Council of Mortgage Lenders\' (CML) prediction of a
rise in repossession and a drop in mortgage lending in 2008, plus recent
International Monetary Fund warnings of a possible crash, painted a somewhat gloomy
picture.

Yet something very different showed up today when Nationwide published its October
house price figures. Not only was the figure up from September\'s 0.7 per cent, but
it reached 1.1 per cent, the joint highest figure for the year along with June. The
building society\'s chief economist Fionnuala Earley said the figure was a
\"surprisingly strong increase\". After the Hometrack figures she might not have been
the only one surprised.

Ms Earley did emphasise that the results for October were \"unlikely to mark the
start of a new upward trend\", as the annual rate of house price inflation would drop
unless November and December saw a strong performance to match that of the market in
the last two months of 2006. But undoubtedly the figures will have clouded the
picture further.

Yet one might ask the question: does this all matter? Not in the long run is the
answer given by property investment company Inside Track. Head of communications
Pierre Williams said the negative headlines seen of late were not \"borne out by
reality\" - citing the Nationwide figures as an example - but said what really
mattered was not the short-term fluctuations in the market but how it performed over
greater periods of time.

In this instance, he said, the conditions remained in place for the property market
to be sustained over the longer run, even if short-term conditions were not so good:
\"The key to the UK property market is the fact that we\'ve got a growing, worsening
undersupply situation [while] the overall economy remains buoyant. Those two factors
are going to underpin prices.\"

Not only that, he added, but the fact that there has been a slowdown is far from
damaging to the property market as an investment product. Instead, he said, the
situation has come as \"a relief\", since the market in its high inflationary state
was \"not sustainable\".

Mr Williams predicts a \"steady\" rate that will suit the market well. Perhaps
inevitable given the gloomier headlines to which he referred, some predictions are
not so optimistic. While the CML has tipped a one per cent rise in property prices,
Capital Economics has said there will be a three per cent price fall in 2008 and
again in 2009. But even two years is not what most would call long-term, so if the
conditions remain ones that will underpin longer-term growth, investors should still
be able to plan ahead with confidence.

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