The latest House Price Index showed a 1.7% fall in prices year-on-year, which agents say shows a static market, not one in danger of freefall.But proposals to cap mortgage tax relief and the hike in stamp duty since January could jeopardise that stability.’The index is in line with what we expected,’ said Estate Agents Association president Alan Maclean.
‘The market has been fairly resilient over the years but my fear is that the meddling with mortgage interest relief could affect that.’There is a general lack of the feelgood factor, people are less secure about their jobs and they may decide to stay put rather than move,’ he said.The managing director of one of the Island’s biggest agents, Troys, is also urging the States to re-think the mortgage tax relief proposal.Rupert Huelin said: ‘It is not the time to start doing things like that, it might prevent people from getting onto the property ladder.’But he still has confidence in the market: ‘We don’t see prices falling out of the sky and we do not see negative equity.’Mr Huelin also said that sellers’ expectations had become more realistic.’They know what they can achieve and if they want to move they are going to be more realistic with the price,’ he said.But he has cast doubt on the accuracy of the index itself, even though six times as many properties were included in it compared to the old method.
‘I feel it’s not a true reflection of the market, prices have been fairly static but there’s a lot more turnover,’ he said.But the former head of the UK government’s statistical service says the public can have confidence in the new index.Tim Holt, the chairman of the independent Statistics Users Group, says that the old index was flawed because it was too restricted and did not include enough properties of different types.
The new index is based on more than 1,000 property sales, from one bedroom flats to four bedroom houses.’This gives us a picture which is based upon the full range, or as near as possible, of housing transactions,’ he said.’This is a more representative picture and by the same token gives us a more accurate picture of the average level of prices for each of the categories,’ he said.Mr Holt admitted that the margin of error in the last index – which showed a year-on-year increase in the third quarter of 2002 of 11% – meant that the actual figure could have been anything between 6% and 16%.
