The Internets Guide to Making Money and Suceeding
Thursday May 25th 2017

MUST SEE !!!

Archives

Lower housing prices in the UK

We are living in a time of history that is bound to be looked back on in housing market circles as a true quandary. The average cost of a house this year is less than it was last year. This might seem like good news for those looking to buy a home, but is it? To add to the confusion, there are actually several studies out that show on year-by-year basis that housing prices are actually rising. So what to believe?

While the asking price of the home might seem to have decreased, the amount of loan approvals has also done the same, leading to a flurry of houses on the market of decreased value with no one to buy them. This creates an endless cycle of decreasing property values, but also a decrease in the amount of money that a bank can make in comparison to loan risk, making it ever more imperative that the bank find buyers who will not default. Are you one of them? If you thought it was hard to get into a home in previous years, it is unlikely that you will find the loan approval to move into a new home today. Continuing home surpluses on the market, it is also very unlikely that new home creation will begin to turn the market around and stimulate the banks to start pushing mortgage products as a major income source for themselves, instead looking to reduce risk and wait it out.

The only thing that seems to be pushing the housing market upwards is the change from set rate loans to variable rate mortgages in order to take advantage of lowered interest rates., which in fact is a false indicator. When the refinancing trend is over, what is to come next/ Very few seem to be in consensus on the issue. There are some that feel that the prices of homes is still in a free fall, and will continue to be so for another 15-20%. Until then, it is very questionable whether there will be an increase in new home sales in the UK. The government itself seems to have given up. They have proven this by lowering their estimate of real estate growth to a little over a quarter of a million homes in 2012.

While lower home prices historically have led to an increase in home sales in the short term, it is not until the buyers’ market can be exploited by loan approvals that the market can turn around. Residential home buyers are actually only a small share of the financial pie, and is relatively unimportant to the financial growth of the market overall. Unless there is money to be made on the sale, holding, and resell of a home, major players such as real estate holding companies will shy away from purchases, and while they do so, the bottleneck of prices to true availability is likely to continue.

So while the times may seem confusing, the actuality is that prices alone are not enough. It does no good to be able to afford a loan that is not available. Even the poorest of the poor may now see, that we simply need housing prices to fall even further, so that they can go up again, because right now, the banker can not see enough profit in the housing industry to let you move into a home that you can afford.

Be Sociable, Share!