Investors look to property amid market turmoil

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by Kay Murchie

As the global financial turmoil continues, investors are looking for a safe place to put their cash.

Liam Bailey of estate agent, Knight Frank, said they are seeing a growth in interest from investors who are coming to them, partly because they feel that bricks and mortar are safer than banks and stocks and shares in the current economic climate.

Furthermore Lindsay Cuthill of Savills estate agents received an enquiry from a businessman about purchasing a mews house in Chelsea, who said he felt that his money is safer in property than in the banks.

Buyers are struggling in today’s market due to the mortgage drought but investors who have ready cash are in a stronger position to negotiate price reductions than those who require a mortgage.

Nervous sellers will be happy to reduce the asking price as much as 20% if a buyer has cash, according to Mr Bailey.

Furthermore, this group of people are able to sit tight amid the housing market uncertainty until house prices begin to recover.

The Halifax reported yesterday that UK house prices experienced a fall of 1.3% in September.

According to the Halifax, a further £2,000 has been wiped off the value of an average home, taking the average cost to £172,108, similar to the average price of a UK home in January 2006.

Commenting on the figures, Martin Ellis, chief economist at the Halifax, said the price fall in the three months to September was very similar to that in the previous quarter, suggesting that the trend rate of decline may be beginning to stabilise.

However, he added that conditions will still remain challenging in the market due to the reduction in the availability of home loans.