House Price Trends in the United Kingdom
Due to poor demand, house prices in the UK are likely to remain flat until 2012, according to Jon Brown, a property expert from www.iammoving.com.
Jon says “Many people are forced to let their properties and only place their homes on the market when they can see a demand for them”. Mr Brown also added that “The possibility of banks and lenders providing more for those keen to buy is unlikely to happen; this problem means that there will be very little movement until 2012.”
His comments support a report released by the Royal Institution of Chartered Surveyors (RICS), which shows that the housing market remained flat in March. Furthermore, 6% of surveyors reported a fall, rather than a rise, in new buyer enquiries.
Don’t be surprised
Considering the predictions made in October 2007, the lack of house price growth is not a surprise. Fionnula Earley, the group economist at Nationwide said, “We don’t think the market is going to crash, but prices will be flat. As a result of slower economic growth and the impact of the credit crunch, we now think inflation will be around 0%. We might then see a few years of flat growth.”
Nationwide downgraded its expected house price growth for 2008 to 0%, and it predicted that growth would be flat for some years after that due to slower economic growth and the impact of the global credit crunch.
These predictions are a result of news in 2007 from the International Monetary Fund (IMF), which warned that the UK’s housing market was overpriced by 40% and could face a slump similar to America’s – where prices have fallen up to 30% in certain areas.
UK house prices have seen a significant rise over the last ten years; however, this rapid growth was, and is, not sustainable, according to Jon Brown. He says, “Lessons must be learned from the recession and the increases seen in property prices over the last decade should not be repeated.”
What solutions should you consider
1) Don’t move… improve!
With constant reports that the housing market is likely to remain static this year, it is purported that many people in the UK will undertake home improvement projects to try to increase their property’s value and make it more appealing to potential purchasers.
TV presenter, Sarah Beeney, recently told www.moneysupermarket.com that individuals are most likely to focus their efforts on upgrading kitchens and bathrooms. Whilst home improvements can add value and increase appeal, the disadvantage is that some form of investment is required (in terms of both time and money) and a future sale is not guaranteed.
2) Quick sale for quick cash
Furthermore, some homeowners desperate to sell are even considering a fast sale via companies such as Quick Cash for Properties, which buy houses for cash regardless of current condition. The advantage of this solution is that it’s quick and buyers do not need to invest time and/or money in home improvements. However, the disadvantage is that the offer is likely to be below market value.
To conclude, Jon Brown suggests that the most financially sensible option for homeowners is to stay put and the best possible outcome would be for things simply to carry on as they are or slightly improve.”
3) Smart solutions
Ultimately and irrespective of the housing market, the real problem is around buyers, sellers and the terms of their house transaction. For example, you may be unable to buy because you cannot get a mortgage and would not mind paying a premium to overcome your borrowing circumstances. Another example, you could be unable to sell at below market value but would welcome receiving a premium for selling in flexible terms. In both circumstances, you need to get in touch with a house transaction specialist.
Visit Property Investment Information Blog (http://www.bfr-invest.net/pibwp) where we provide plenty suggestions to help people make smart property transactions.
Francis Emery
