Teresa Hunter: When estate agent turns pessimistic it's time to worry

THERE'S one thing harder to find than a needle in a haystack, and that is an estate agent willing to talk down the property market, which makes Savills' prediction that property prices could fall again next year so chilling.

Its latest report suggests there is a 50 per cent chance house prices could tumble by 6.6 per cent. Leaving aside the absurdity of such a precise minus-6.6 per cent forecast, the prospect of a double-dip property crash or a "W"-shaped recovery, depending on whether you are a glass half empty or half full sort of reader, cannot be dismissed lightly.

So what are the facts. According to the Halifax, house prices have risen 2.9 per cent this year, leading to expectations that property inflation for 2009 could come close to 5 per cent. Not what you'd call a slump.

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Nationwide is even more bullish, reporting prices 2 per cent higher than a year ago, wiping out falls at the end of 2008.

Moneyfacts last week reported that, at long last, it is becoming easier to get a mortgage without a massive deposit. There are now around 230 home loans available to those who can put down 15 per cent of the value, compared with 169 six months ago.

Big firms running property funds are also more relaxed. Some had blocked withdrawals. But Standard Life, Aviva and Aegon are among the firms which have now lifted these.

Not only has confidence returned to the sector – so fewer panic exits are anticipated – but firms believe if they need to sell property to meet encashments, they will be able to at a fair price.

Savills admits that the strength of the recovery has taken it and many other commentators by surprise, although given the speed at which the market dived, some bounce when it hit the ground was not that unlikely.

Most observers believe recent price rises can be put down to cash buyers hoping to make a killing from a market on its back, combined with a shortage of property for sale. This, plus an influx of foreign money, exploiting low prices and the cheap pound, have kept values buoyed.

But there are other forces at play. The Bank of England has been pumping cash into the economy through its quantitative easing programme, and last week signalled a further 25 billion injection, bringing the total to 200bn. The jury is out on whether this exercise has been effective in avoiding a slump, and such activities take time to work through the system.

In fact, we have seen a stock market boom and property recovery, while economic activity is still shrinking.

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This suggests that the new cash has been invested in assets and not jobs, and as such there has to be a danger it may have helped create false markets.

At some stage this programme will have to be reversed. Maybe the time has come to break the habit of a lifetime, and believe what an estate agent has to say.

Turning the tide

LAST weekend's floods were a timely reminder that winter is upon us, and householders should waste no time in weather-proofing their homes.

We can't control where the rains fall and the winds blow, but there are many measures which we can take to lessen their impact.

First, make sure your home and its contents are properly insured. Next, take steps to enable that insurance to continue by minimising any claims, and speed up their payment.

Unless you have been the victim of a flood, you cannot begin to imagine the misery and heartache it entails. After a good soaking, it can be years before you can get back into your home. After the Hull floods two years ago, families were camped out in caravans for months.

Worse still. Those who are forced to make substantial insurance claims may find their premiums rising to unaffordable levels, or their homes rendered uninsurable. A home which can't be insured cannot be sold and is worthless. Similarly, a bad flood claims history will deter buyers.

It makes sense, therefore, to photograph the items in your home, and if possible, keep together any receipts you have for furniture and electrical items, to prove their age and how much you paid for them.

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Then look around your home to see how it could be protected if disaster were to strike. Draw up a contingency plan for moving as many valuables upstairs as possible.

Work with your neighbours and if necessary the local authority to improve the flood defences of your road, and together minimise the likelihood of a costly dousing.

Right Honourable truce

I DON'T know about you, but I am sick to death of the Westminster MPs' expenses row. I suggest a pact. If MPs accept the Kelly report with the graciousness we have a right to expect from our "honourable" members, we will respect that and move on.

It's time to draw a line.