Over the last few weeks there have been comments from industry experts all warning us that the UK is heading for a house price crisis or property price crash in the very near future, but when and is it really likely to happen?
Well some of the UK banks have claimed that the housing market will experience a slight downturn but nothing like the crash being claimed by some. Certainly we should see no sudden crash.
It all seems to stem back to 2005 when everyone said the housing market would crash. Back then the average house price was around £162K up from around £60K in the 1990's. So then as now really, everyone was talking of the imminent house price crash.
At the same time in 2005 banks started offering customers huge mortgages based on their 'affordability' which was determined by the bank, rather than sticking to the traditional and more sensible in my opinion, method of lending 3.5 times a persons salary. At least this way you knew approximately one third of your salary would go towards paying back your mortgage and you would not be stretched beyond your means every month.
This was also combined with an all time low of 4.5 per cent Bank of England base rate, which contributed to the massive house price increases we've seen over the last 2 years.
So will there be a house price crash? If you compare today to the 1990's then there are definite similarities; massive house price increases and concerns about long term affordability. Today we're all worried about our huge mortgage debts rather than massively scary interest rate hikes.
If current house prices fall flat or even fall slightly as they seem to have been doing in recent months most home owners will be able to sit tight. Most homeowners can afford to wait and see what happens with the market rather than being forced into selling their homes because they cannot afford it.
Certainly people who have been repaying a mortgage for 10 years or more should have enough equity in their property to ride out any fall in prices.