UK property prices are being driven down by pent-up supply and decreased demand. Since 2007, the UK property market has been struggling. These difficulties are expected to continue through 2009.
The Rightmove House Price Index saw UK residential property prices in May 2008 at an average of about 243,000 pounds decreasing gradually to December 2008 figures of 218,000 pounds.
For 2008, UK house prices have fallen 8.7%. Property researchers and banks have forecast declines of anywhere from 10% to 20% in UK property prices for 2009. The UK property price market remains volatile.
Hometrack's Director of Research Richard Donnell said the following in a December 29, 2008 report: "The onset of recession and the prospect of rising unemployment over 2009 will continue to damp confidence and in turn demand, which will inevitably lead to further house price falls over the next 12 months."
Average UK property prices differ depending on the region. Although, London was initially resistant to the economic downturn, it is now seeing worsening economic conditions compared to the rest of the the United Kingdom.
Some property agents believe that UK property prices have fallen between 15% to 50% from 2007. Property agents are more likely to reduce prices due to increased inventory, as houses remain on the market for nearly twice as long in 2008. There is also an increase in the number of unsold homes that have remained on the market for longer than a year.
The Council of Mortgage Lenders sees increased repossessions possibly up 66% for 2009. This will increase the pressure on UK property prices as more "forced-sale" properties become available.
Some of these property salesmen are shameless. Even contradicting all evidence, they will continue their refrain - "It is always a good time to buy and the property market will always increase" refrain. Don't buy this "bill of goods." What goes up, must come down. Sound common sense must always drive business decisions trumping marketing rhetoric.
The credit crunch will debilitate those with questionable credit ratings. Those with good credit and available liquidity should leverage their position to find a great deal. Many property bargains are available as UK property prices fall.
There should be many deals out there for the enterprising. Buyers need to know that they have the advantage. They should be able to negotiate better deals.
Over time, property builders will reduce the supply by cutting production on new property development. Gradually, supply will be diminished in order to better match demand. Timing is very important as the bottom of the UK property market is uncertain.
It is nearly impossible to properly time the exact bottom of a market. UK property prices are expected to continue to fall in 2009. The wise investor should use this knowledge to find the best deal out there.