Wednesday, January 08, 2003

UK: Homesites rising by 25% per year
"House prices are rising at their fastest rate for more than 13 years as the property market shows no sign of slowing down, according to the Nationwide. But the building society's optimism is not matched by the Council of Mortgage Lenders which reports a gradual easing of the market. Nationwide said the cost of a home rose by 2 per cent last month, pushing growth for the year to the end of November up to 25.5 per cent. "While we do not expect too many problems in the housing market, now is not the time to borrow on the assumption that house prices will continue rising at their current rate forever."

This is good advice but it is almost certain to be ignored (as per usual) in the gathering frenzy. In the final year before a bust land prices can rise by as much as 100%: the temptation to borrow and purchase with the hope of early sales and profit will be irresistable.

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