Prepare your battle lines for fight ahead

Now that September is in full swing, the time has come for buyers to dust themselves off and prepare for the battle that is the second and last big selling season of the year.

In doing this, they should be under no illusions - this is a fight, regardless of what their smiling estate agent might have them believe. It may not involve actual fisticuffs, but the tactics that will be required (at least on the buyer's side) will require just as much strategic planning.

The first step will come in laying the groundwork for the effort ahead by working out whether or not they should be entering the property game at all. The main judgement required will be on whether the buyer thinks property prices are on their way up or down.

As with all such financial matters, it always makes sense to be aware of as much of the debate as possible before deciding where you stand. Think how house prices are performing at the moment - the most recent data from the ESRI and Permanent TSB's respected survey finds that prices rose by 6.2 per cent between July last year and a month ago. With average inflation in the wider economy at less than 3 per cent, this represents a fairly good return.

Thanks in large part to the increased supply of properties on the market furthermore, this return is significantly down on the double-digit growth recorded just a couple of years ago, suggesting that the "landing" for house prices may have been a lot softer than some might have feared. In other words, perhaps growth has reached a more manageable and sustainable level.

On the other side of the debate (which is a complicated creature), buyers should be aware that some commentators fear, to put it bluntly, that it can't last.

They point to the ever-climbing rate of debt in the economy and wonder how we would manage to cope if things took a turn for the worse. Their worries have come to the fore recently with reference to the rash of 100 per cent mortgages on the market - if the economy fluttered and house prices fell even a tiny bit, consumers holding these products would be sitting in the very precarious position known as negative equity.

Nerves would also be tested if interest rates (the rates in the accompanying table) rose in a way that created a shock to buyers' already-stretched disposable income. The Central Bank has on a number of occasions worried aloud that today's buyers, with their historically-low interest rates, simply can't get their head around (the bank said it slightly differently) the idea that rates could rise to perhaps triple current levels.

This would make mortgages more expensive and could push some in the market to desperation and, ultimately, repossession. In turn, this could be expected to push down house prices, as confidence in property dissipated and the economy became a less optimistic place.

The bottom line with both sides of the debate is that nobody, regardless of how well they can do their sums and chart their trends, knows for sure where the property market or interest rates are going. What is also true for the would-be buyer, however, is that it will be a mistake to go into battle without giving some thought to the two schools of thought. Only then can they be sure that their decision to fight for that place of their own will be an informed one.