FEAR OF FINANCE

What are we to make of a housing market which finally appears to be moving upwards, as it is at the moment?

The advice, to potential sellers at least, must be that unless you are happy to stay in your present home for some time, you should take immediate advantage of the situation.

The logic for doing so is simple. In the past six months or so, the rise in house prices has been inexorable, particularly in the South-east and London. Both Halifax and Nationwide building societies, which compile monthly statistics on the subject, say prices are on the up.

Is this a situation that is likely to be maintained? Crystal ball-gazing is an invidious task. Ask all those pundits who forecast increases last year - and got it wrong. This year, they forecast a relatively flat market and still appear to have got it wrong - so far.

But it is worth looking in a little detail at what experts say is happening right now. Demand, according to Black Horse Estate Agencies, appears to be heavy among those who were owners once but have been sitting out the downturn before deciding to join in again. There is a limited number of people like that.

Secondly, according to the Royal Institution of Chartered Surveyors, whose members include many estate agents, the price increases are partly determined by the relative non-availability of suitable properties.

The fact is, there are plenty of properties, but many owners are not yet ready to put them up for sale, perhaps because they are still in negative equity. As prices move further up, more and more people will shift out of negative equity and may be prepared to release their homes for sale.

Once a flood of homes for sale hits the market, buyers will be able to pick and choose again, ending the gazumping we have been seeing again in recent months. Prices will stabilise.

What should buyers do? At the risk of sticking my head out and getting it chopped off as prices soar in the autumn, my advice is to wait a while and see how the market pans out.

True, there is marginally greater job security than a year ago. Tax cuts are almost certainly on their way in the next Budget - though only reversing previous years' increases.

Low interest rates make obtaining a mortgage a cheaper proposition than for 30 years or more.

Even so, it is unlikely that the next few months will make a huge difference in terms of the price anyone will be asked to pay for most properties. If they do go up, waiting a while might help in obtaining a discount off the asking price.

As for mortgages, it is possible that rates will rise. Fears of a Labour government plus a rise in world bond prices make it likely. Certainly, longer-term fixed mortgages cost more today than a few months ago.

But good deals will still be available, either through pro-mutual building societies or new telephone lenders such as Direct Line and Bradford & Bingley Mortgages Direct.

It should therefore pay to sit out the current house hype for a while.

Of course, it could be argued that if every homeowner in Britain obeyed this column, any anticipated glut would come sooner rather than later. Perhaps this is because, despite appearances to the contrary, we are still in a buyers' market.

So, contradictory advice? Maybe. But then, who ever claimed that predicting the future is anything more than a load of glass balls?