Pressure of the UK Property Market

As we have all seen in recent months the prices of houses in the current UK property market have been on a decline. In fact in the last few months we have a see the prices of houses in the UK now falling quite substantially and in January 2009 the value of properties have fallen a further 1.3 per cent.

As you will soon discover when you search online there is much being written about the economic crisis that we are all currently facing? Certainly those who own homes have in the last year since the value of their properties drop by around 16.6%. As many people are now forecasting the housing market in the UK will drop even further and sales of properties are not likely to increase for some considerable time yet.

In fact the Royal Institution of Chartered Surveyors (RICS) in the UK are predicting that in 2009 we can see a further 10% decrease in the number of homes being sold. They are actually currently reporting that less than one home is being sold each week, which is the worst conditions the housing market has faced in the last 30 years.

Currently when it comes to the UK property market only those sellers who are prepared to accept that their home is worth far less than it was last year are going to benefit. As mentioned although house values are going to fall another 10% in the coming year the RICS predicts that sales of homes will begin to pick up once more.

Plus when it comes to the current UK property market because mortgage lenders are becoming more cautious this is what will result in house prices falling further this. But hopefully by the start of 2010 then we should start to see improvements which could result in increases in sales.

However, although the current UK property market is at its worst ever for some considerable time there are many people who are still willing to buy. Certainly for those who are looking to invest in property this may be the ideal time to do so. With house prices still falling and so many people being faced with homes being repossessed deals are certainly available.

If you are one of the many people who are thinking of selling their home then certainly this is the time to do so. If you wait any longer for the credit crunch to take a further hold on the financial markets could prove a big mistake for you. Certainly in the next year the finance industry expects to see the increase of house repossessions to increase even more than they did in 2008. Certainly they are predicting in the current UK property market a further 34,000 homes will be repossessed.

So what are the main reasons why we have seen such a big decrease in the value of properties in the current UK property market?

1. Mortgage companies are far less willing to provide finance to those people who want to purchase a home. This is because currently many people are unsure whether in the next few months they will have a job or not and whether repayment of these mortgages can be made.

2. In order to obtain a mortgage the finance companies require the lender to provide a much larger deposit. So for first time buyers actually being able to get a mortgage to buy their first home has virtually become impossible for them.

3. Because people are expecting house prices to fall further this is discouraging them from actually buying when a slump in the value of houses occurs.

4. As unemployment rises so does the prospect of being able to afford to keep the home one has or to buy one in the future.

5. Although the cuts in the banks base rates have helped to reduce how much people’s mortgages cost, this won’t actually help to stop the prices of houses falling further. But even with these cuts the average cost of a mortgage has not altered that much because 2 or 3 years ago people were remortgaging because of the great deals being offered. Also what many of us do not realise is that over time the banks have through their lending been increasing their profit margins?

Above we have looked at what the reasons for why the UK property market looks the way it does. As we watch the current UK property market at the moment there certainly seems to be no chances of the problems easing for many homeowners at present. But it isn’t just homeowners who are suffering with this current slump so are those who build and sell the properties. In recent months there have been many construction workers laid off along with estate agents closing.

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