Property Market

How the housing market shapes up for 2008

Mortgage 2008

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It’s no secret that UK house prices have been falling of late, and it seems very unlikely that this trend will be reversed as the year proceeds. Sky high prices (averaging around £200,000) combined with a lack of liquidity, caused by the Credit Crunch, has meant many people are unable to make a house purchase. This has particularly hit first-time buyers, for which numbers are drooping towards their lowest levels in over twenty years. What the remaining months of 2008 hold is impossible to predict, but judging from what the media says we can at least form some sort of opinion.

One particularly useful website for judging the current housing climate is Housepricecrash.co.uk. Although its name is controversial, as well as much of the opinion expressed by its forum members and owners, it compiles useful data from a number of sources that are analyzing the market. The FT House Price Index, Halifax Index and Land Registry Monthly Report are all listed amongst other sources, giving a fairly comprehensive picture as to what is actually going on - and a house price crash it isn’t.

Currently house prices are trickling down on a number of price indexes, but not all of them. Meanwhile, they have also been consistently going down month to month on some indexes, but again some differ. Overall, over a twelve month period, average house prices have beaten inflation, and in some cases the positive percentage change has been significant. So how does all of this spell doom and gloom, along with constant media sentiment that prices are falling?

Quite what the future holds is anyone’s guess. We’re living in uncertain economic times, with predictions about an American recession – some people ludicrously suggesting the likelihood of a Great Depression – and the full extent of the Credit Crunch yet to be revealed. The general conclusion from sifting through various data for 2008 is that the UK housing market will remain flat, or slightly below inflation, so there is unlikely to be significant losses for the average UK homeowner. Where you are located, however, will certainly make a difference, so it’s worth doing some further research to see what predictions are in your local area. Take a look at Houseprices.co.uk for sales information in your local area.

If you trawl the internet you’ll be confronted with varying opinions and advice and what to do to ‘survive’ or ‘ride’ the current housing market falls. Be wary of anyone that suggests you should sell your house and get out of the falling market, because there is simply not enough evidence to say such predictions are sound. If you’ve owned your house for three years or more, then it’s likely that you’ve made a healthy profit already, so there’s no need to rush and flee the market. First time buyers meanwhile, if they can put enough money down for the significant deposits now needed, should be cautious about entering the market. Another possible scenario is that you could fall into negative equity after a year – which is not a pleasant situation for any homeowner to be in. If you’re in need of financial help or refinancing over the year, then take a look at the mortgages offered by NatWest, while Alliance and Leicester’s mortgage calculator is a useful tool for working out exactly what you can afford.

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