5 Reasons Why Houses Prices Are Falling

Why Are House Prices Falling

The housing market in the UK is in freefall currently, in stark contrast to the buoyant property market scene of just a few years ago. But why are house prices falling and are you concerned about the negative equity that your home presents you with.

Throughout the nineties and midway through the 21st century the UK property market enjoyed its biggest ever boom. Our homes it would seem were our biggest asset. This though was a false sense of economy as most would never realise the equity in our homes as to move would negate the profit gained.

1. House Prices Are Unaffordable To First Time Buyers - First time buyers are finding it increasingly difficult to get onto the first step of the property ladder as the average house price to earning ratio are now poles apart.
2. Mortgage Lenders Are Not Approving Finance - The phrase Credit Crunch applies to the mortgage industry more than any other. Applications for mortgages are fewer and more mortgage applications are being rejected.
3. Interest Rates Increasing - Interest rates are increasing with velocity, the average monthy mortgage repayment has risen by 30%. This effects first buyers and low wage earners who are now in danger of repossession.
4. Unstable Economy - Any rumour of an unstable economy and one of first industries to be hit is residential property market.
5. What Goes Up Must Come Down - the last decade of phenomenal growth had to slowdown sometime, an initial slowdown is viewed as a negative - the knock on effect is panic, reduction in consumer spend and eventually a credit crunch situtaion.

Is Now A Good Time To Invest In Property

If you intend to move house or buy a property for the first time for the sole purpose to live in it may be wise decision to not do anything yet. House prices will probably continue to fall for the forseeable future - then recovery is expected.

For the property investor now is the perfect time to invest in property both residential and commercial. The Buy To Let market will increase dramatically as tenants will outnumber available property.

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