LOCAL estate agents have allayed fears of an impending property crash following the release of recent figures which indicate a dramatic nine per cent plummet in property prices in south west Surrey. The latest figures from the Halifax House Price Index - the longest running monthly house price series - declare that houses in the South East have risen by one per cent in the 12 months to June 2005. However, in the same timeframe the average house price in south west Surrey has fallen to £312,978 - a decrease of nine per cent. Local MP Jeremy Hunt was keen to add words of caution to the most vulnerable on the property ladder - first-time buyers who could face the pitfalls of negative equity. "If there there really has been a nine per cent drop, that could be devastating for younger first-time buyers with large mortgages. We need to make sure we do not end up with a negative-equity crisis locally," he said. Acknowledging both the survey and Mr Hunt's comments, several Farnham estate agents were keen to dispel widespread fear of a return to falling house prices and the doom and gloom of the late 80s. "I wouldn't have said that the bottom end of the market that we deal with here has actually dropped - it's probably that prices stopped going up this time last year. A house that was worth £120,000 last year is still worth the same amount today," asserted Peter Fearn of Keats Fearn Independent Estate Agents. "The trouble is that we don't get a lot of true first-time buyers in Farnham because of the starting prices of the houses," he added. "I think that you can say that for first- time buyers in the Farnham area, negative equity isn't a serious worry because the lower end of the market is constantly bolstered by investment buyers buying to let, so that is stopping prices going down. So the bottom end of the market has been static rather than falling, and anything under £120-£140,000 has held its value quite well over the last 12 months. "The Land Registry says that sales are 30 per cent down, but our sales in Farnham have been 20 per cent up on the last period last year, so we've not really suffered. Prices in the £200-£300,000 range have dropped by nine - 10 per cent, but at the top end of the market anything over £500,000 has bounced back this year," he concluded. Meanwhile, Duncan Pate of Castles Estate Agents gave his response to the alleged fall in house prices. "I don't know whether I would go as far as that [nine per cent]. I think we have seen a correction, whether it's nine per cent or not, I don't know whether anyone's able to be that specific," he said. In response to the problem of negative equity and its implications to first-time buyers, Mr Pate was keen to look to the positives. "What we have seen more recently is more responsible lending and more of a requirement for first-time buyers to be putting down a deposit, which provides something of a buffer against negative equity. "Negative equity is only generally a problem for people if they are intending to sell and have bought a house within the last 12 months. I think that most people look at houses as a bit more of a longer-term investment than that. The costs of buying and selling houses are such that if you are planning to move within a year, then you tend not to buy a house - you'd probably rent somewhere." "We have seen something of an adjustment relative to the peak of 14 months ago, but it's nothing to get too excited about because what we saw in terms of growth last year was excessive and unsustainable, and at the time all the commentators were saying exactly that. "And I think what we're seeing is a reduction from a peak that was probably artificially high, and what we're seeing now is prices at a more sustainable level," he concluded. "The market has been through a bit of a tough time at the latter end of last year and it wasn't particularly good at the beginning of this year, but things have turned around and it's looking brighter," said Jeremy Smith of Bells Potter Estate Agents. "I wouldn't have said there has been a drastic decrease in price at all really. I would have thought that prices from June of this year to June of last year were fairly static," he added.
