Property: Return of the indulgent parents

Students who have to squash into grotty houses where the heating is erratic and furniture falling apart might do well to take a close look at the circumstances of some of their new acquaintances. Apparently this autumn has seen the wealthy parent come out from a long hibernation and buy for their student sons and daughters.

One London student at least will have the prestigious address of Observatory Gardens, Kensington, and is not likely to get away with many rounds at the students union bar. Her father paid pounds 700,000 for the three-bedroom, three-bathroom apartment, according to the agents, Beaney Pearce.

Even those starting jobs are spared the stampede for a decent property, since more than a few parents are happy to set them up in their own home once they have shown they can support themselves. The biggest demand is for properties between pounds 250,000 and pounds 400,000. "I think some people imagine their offspring to be in hourly danger of being mugged unless they live in a good area," observes Linda Beaney. "Many are paying cash."

Those are not the buyers likely to be put off by any potential increase in mortgage interest rates, following the Bank of England's decision on Thursday to nudge up base rates by a further 0.25. But the housing market generally could be dented by any increase. In the country house sector, Savills Research notes a slowing down across the country over the third quarter of the year.

Prices increased by 1.7 per cent over this period and by 13.2 per cent in the 12 months to September 97. This is down from 15.5 per cent growth in the year to June 97. They estimate that the average price paid for a country property in the north of England is about pounds 270,000 and most buyers would rely on a mortgage. Their latest figures also confirm their belief in the importance of strong local economies and can be seen in price rises around cities such as Manchester and Leeds.

One area where buyers are increasingly prepared to lay down their cash is in buying off-plan. Until recently it was something that sat well with foreign buyers but didn't appeal to British purchasers who liked to see what they were getting for their money. A shortage of good property has obviously spurred buyers into committing early, but the developers themselves had not exploited this market fully.

Now, show flats and CD-Roms make the whole business far less speculative. DTZ Debenham Thorpe has sold 20 per cent of the Atrium Building in Vincent Square, SW1, offplan to British buyers, and the scheme has not been launched yet.

Andrew Mancais, for the property advisers, says that buyers are prepared to put down their 10 per cents as much to secure the flat of their choice as a hedge against rising prices. Those inclined to sell on their contracts may well find that developers stop the title deeds being assignable until completion. Jonathan Seal of Hamptons International has seen Prescott Street, an office conversion in the City, sell well off-plan.

He does warn of the dangers of buying off-plan where the developer is an unknown quantity. "Purchasers should make sure the building has the right guarantees and if you are buying on square foot value, it is worth being cautious and measuring up prior to completion."

He also warns against what seems an extremely good deal in a fringe area. "It is not a good idea to buy into a refurbished development where the developer does not have a large name and you are not able to see examples of previous work."