IS THE BOTTOM OF THE MARKET CLOSE BY?

Phil Tennant, Hampton International's area director for London says they believe the fall has been faster and deeper than many market observers, and certainly those monthly Nationwide and Halifax reports, have so far realised.

"When I heard Nationwide confirm an annual fall of 15.99%, I found myself wondering, 'What about the rest?' Several market analyses have felt about six months behind the times in recent months.

"Another distortion in building society figures is that they are bound to ignore cash purchasers of whom there are more than you might imagine."

Tennant therefore thinks the bottom of the market is much closer than most people realise, "although we won't know it is the bottom for several months afterwards.

"What is already clear is that this slump will not bring the degree of pain to buyers which we saw in the last two big downturns in 1990 and 1974 when people could no longer afford to pay the mortgage because money was so expensive.

"Mortgages are now very affordable for most people, because rates have been pushed so far downwards.

"What has happened this time is that demand has been crushed by a lack of finance, which has brought down prices while recession filtered out to the rest of the economy.

"There is a real danger that people now see Woolworths closing down and decide that house prices have further to plunge. The reality may well be that the housing crash has already largely happened."

One other reason to feel hopeful is a big squeezing of the price gap to be funded when existing home-owners decide to trade up the market, Tennant says.

"When anything appears on our books, or online which looks seriously cheap, the telephone goes mad.

"This implies latent demand has never really gone away."

Buyers are particularly concentrated at the lower end of the London market, he says.

"We had offers on four properties at our Kensington, West London, office last week, with three agreed, all below £700,000.

"That is practically first time buyer level for Kensington and a sign that fresh equity is again coming into the market."

A similar warning to buyers that they might wait too long for prices to hit bottom has come from James Greenwood, at Stacks Property Search and Acquisition, which finds suitable properties for those too busy to look for themselves.

"If you buy today at 35% less than the peak of 2007, the market will almost certainly settle at more than you pay today," Greenwood says.

"For those upsizing, or moving to an area where prices have dropped more than the average, the advantage becomes even more significant.

"Finding the right property to buy can take months, so if you wait for the market to level out before you start looking, you can miss the boat completely or find yourself competing with numerous other buyers who judge the time has come to jump on board."

However, bullish talk of recovery has yet to impress the pundits at Capital Economics, the consultancy which continues to forecast a hard landing for the housing market.

This week, it acknowledged "good news" from the Royal Institution of Chartered Surveyors (RICS) that the trend of new buyer enquiries had extended its improvement.

But it concluded: "With recession gathering momentum, we would not be surprised to see buyer enquiries fall back in the months ahead, especially as lenders continue to tighten lending criteria and pass on only part of the cuts in official interest rates to new buyers. In short the house price correction has at least another year to run."

So the contrasting assessments of the housing market would appear at this stage in the downturn to focus on the carnage now under way in the High Street: is it a sign the worst is over in housing, or that property prices have further to fall?

:: LANDLORDS GET READY TO HUNKER DOWN FOR LONG TERM

Buoyed up by falling rates, which mean their monthly mortgage repayments are plunging, landlords are shrugging off falling capital values and opting to stay put for the longer term, claims a new survey.

According to ARLA (The Association for Residential Letting Agents), the proportion of landlords who do not expect to sell during the next year has surged from 77% to 88%.

This figure might be explained by landlords deciding it is virtually impossible to get a decent price in today's market.

The annual life expectancy of residential property investments averages 16.3 years, while more than one in five investors expects to maintain their investments for more than 20 years.

Although property prices are falling, ARLA believes that many landlords have been very conservative in their borrowing.

It reckons the average LTV (loan to value) ratio across landlords' portfolios is just 56% with only a third of investors having an LTV above 76%. This would suggest many investors are better placed to avoid negative equity than owner-occupiers in the mainstream mortgage market, even if prices continue to slide through 2009.

ARLA spokesman Malcolm Harrison says: "The average landlord went into bricks and mortar for the long term, and understands the contra-cycle of capital values and rentals, and is looking for his place in the sun 20 years down the line.

"Sensible landlords recognise they don't always have high capital appreciation, or indeed high rents, but over the years, they can anticipate a reasonable return from a combination of the two."

The ARLA survey says landlords' fortunes in recent months have been closely affected by the location of their properties: for instance, the average capital asset value of rented houses in the past three months fell by 4.3% in prime Central London and 4.9% in the rest of the South East, but rose across the rest of the UK by 1.5%.

Over the same period, the average value of rented flats fell by 8.8% across the UK, largely because of a 12.8% plunge in central London. Falls elsewhere were significantly smaller.

However ARLA does admit one worrying trend - the average void period is up from 24 days to 27.

The vast majority of ARLA members (95%, against 93% three months ago) say they are seeing an increase in the volume of properties coming onto the rental market, largely driven by owners unable to sell.

On average, landlords say tenants remain in the same property for an average of 16.6 months - down slightly on 16.7 months in the last quarterly survey.

ARLA claims that the buyer of an investment property costing £305,000 today with a 25% deposit of £82,100 could expect an annual compound return of 21.54% per year. That assumes the property is worth nearly £446,000 five years from now, an increase of nearly 50% which many forecasters might struggle to accept.

:: COUNTRY BUYERS FACE GREATER RISK OF FARM SMELLS

Beware of the possible pong from your neighbours! That's the warning to buyers dreaming of a move to a rural retreat from a property-hunting expert, following new EU regulations concerning the storage of farm waste- muck, slurry and dung.

Jonathan Bramwell, director of property acquisition company Prime Purchase, thinks EU rules requiring farmers to store all farm waste and effluent in greater volumes between October 1 and mid-January each year will lead to intensive slurry and muck spreading, with greater volumes of waste likely to be spread on land from late-January until Spring.

"The countryside is certainly going to be a lot smellier at certain times of the year," Bramwell says.

"This is a serious issue not only for farmers, but also for people who own properties adjoining livestock farms. Spreading of farm waste can only happen in a closed period with no spreading allowed in autumn and winter.

"Extra quantities of stored waste will be smelly and then there will be more smells from mid-January onwards as the slurry and other waste spread will be more concentrated."

Bramwell says that potential farm smells can easily be overlooked by buyers.

Potential pongs aren't the only reason for furrowed brows of late in Britain's countryside: latest data from agents Knight Frank says the price of farmland saw its largest quarterly fall in value - 5.2% - since records began 14 years ago, in line with the general crash in commodity prices.

Knight Frank thinks demand may have slumped because "lifestyle buyers", based in the City no longer have huge bonuses to salt away. Enquiries from serious buyers for workable farms have also fallen.

INFORMATION: Prime Purchase (Country); 0207 881 2388.

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