According to Your Move, the effect of five hikes by the Bank's monetary policy committee (MPC) during the past year will see property values decrease in August. The estate agent network predicted that house exchange prices over the course of July will increase by 0.94 per cent to an average of 182,748 pounds.
However, next month is forecasted to see a fall of 0.34 per cent with the typical home now costing 182,134 pounds. Compared to the same period 12 months ago, house prices are forecasted to have increased by 9.46 per cent as of the end of July, compared to an 8.8 per cent rise in the year ending August.
Meanwhile, agreed property prices (when an offer to buy a home has been accepted) in July decreased by 0.47 per cent to 182,218 pounds from the 183,080 pounds recorded in June. As a result, the firm claimed that such figures only act as "further reinforcing" for forecasts that August and September will see a curbing in property prices.
David Newnes, managing director of Your Move, said: "Successive interest rate rises which might have reined in house price growth have not actually led to a fall in prices but the August prediction shows the first signs that the MPC medicine is starting to bite through on price growth. Significant numbers of borrowers were immune to rate hikes as they had taken the wise precaution of choosing a fixed-rate loan.
Now that many borrowers are coming off those cheap fixed-rate deals and having to pay a higher rate of interest, the MPC's rate rises are starting to have an effect by cooling price rises which is exactly what they wanted to achieve".
He added that as a result of MPC increases, the value of property is set to decrease over the coming weeks, with September predicted to be a "sober" month as prospective buyers look to get larger discounts on the asking price of homes.
Meanwhile, Mr Newnes claimed that the forthcoming staggered introduction of home information packs is unlikely to have any major impact in terms of driving house prices down. Consequently, he reported that any further interest rate increases by the Bank would be unnecessary, as the housing sector is predicted to "remain robust" in the medium to long-term.
As a result of the announcement from Your Move, potential first-time buyers may find their difficulties in getting on the housing ladder eased. At the beginning of the month a study by Abbey indicated that millions of consumers are spending money meant to be going towards making a property deposit on other items.
Some 11.2 million of those putting money aside were said to have "dipped into" such a savings account at least once, with 888,000 Britons doing so every week. Managing director of Abbey for Intermediaries Ricky Okey claimed that the figures "go a long way" into revealing why many people struggle to buy their first home and incur difficulties making homeowner loan repayments.
In 2005 property inflation hit 19 per cent, and in 2006 the official property inflation reached sixteen per cent, and according to property for sale in Andorra specialists Tribune Properties 2007 is likely to see a further ten per cent rise.
'There are three streams of buyers for Andorra', say Tribune, 'An active local market, second home buyers looking for ski apartments, and international buyers who want to gain residency in a tax haven. The international buyers add pressure on prices and often buy three or four bedroom apartments and chalets, making sure that the top end of the market is as active as the low and mid range properties.'
With a lack of snow for the first eight weeks of the Andorra ski holiday season, the second home buyers could be thinner on the ground than usual. The number of tourists is down by some fifteen per cent, and that could impact the property market as some visitors like it so much they buy a property in popular resorts such as Arinsal and Soldeu. So we feel a ten per cent rise in Andorra property values could be realistic for 2007.'
Andorra as a tax haven destination has been benefitting recently from the high cost of real estate in Monaco. Monaco recently became the most expensive country for property in Europe, and while a 32m2 studio in Monaco will cost close to a million Euros including the closing costs, Andorra offers over 100m2 three bedroom two bathroom apartments at less than half the price - with the same tax advantages as better known Monaco, bringing out a map of Andorra for many investors recently.
The different type of buyers tend to head for different areas of Andorra, with the ski apartment buyers tending to purchase in the key ski resorts of Soldeu and Arinsal.
Those looking for residency go more for the year round villages and towns which have a resident community.
Outside of the capital (la Vella) these tend to be La Massana and the upcoming village of Anyos, Ordino and Arinsal, although Arinsal's nightlife during the ski season early December to late April tends to steer many newcomers to La Massana and Ordino.
Holidays In Andorra
In addition to attracting international buyers in increasing numbers for residency, the Andorra authorities have invested heavily in their ski infrastructure, boosting the country's tourism potential and subsequently Andorra's real estate market.
And for this year's ski season Andorra has opened a new family friendly ski park in Arinsal, moving away further still from her old image of a cheap and cheerful ski holiday for 18-30 year olds to one that caters well for all.
One of the few drawbacks when taking Andorra residency compared to Monaco has been access to a major international airport. While Monaco enjoys close proximity to Nice Airport, with a ten minute helicopter ride available, Andorra's nearest airports have been Barcelona and Toulouse, three hours away, with no direct Andorra flights.
Recent road improvements between Barcelona and Andorra has cut this by thirty minutes, and there is a possibility of a scheduled helicopter service, Andorra weather forecast permitting, or more likely ten minutes from the Spanish Andorra border, allowing quicker access to international flights for business people considering residency in Andorra.
Other improvements within Andorra include new tunnels, allowing quicker access to the ski fields, and driving around Andorra easier.
With more demand from international buyers who want to take advantage of Andorra residency, the Andorra government announced in February that it was increasing the number of residency applications from the previous 200 year a year to 500.
'Andorra is becoming more popular among the international buyers', comment local travel guide YourAndorra, 'And with Monaco real estate prices sky high it comes as no surprise that the government has moved favourably by allowing more residents. But it's not just the tax free living they come for - it's the Andorra snow report as well for many who see the ideal opportunity to live in a tax free environment and enjoying winter sports too.'
Both Steve Smith & Tribune are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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