Over recent years homeowners in the UK have been delighted to see that property prices have rocketed, leaving them sitting on tidy sums of equity that has increased considerably year on year. Of course, the news was not so good for non-homeowners that were looking to get into the property ladder, as year on year the prospect of home ownership has slipped further and further from their reach, as property prices have reached unaffordable levels.
However, although property prices have been rocketing over recent years, the last eighteen months or so has not been so good for homeowners. Despite seeing their equity levels go through the roof in many cases, homeowners have also seen interest rates rocket, and this has meant increased repayments on their mortgages, which has caused financial problems for many households and has increased the number of repossessions in the UK.
What's more, according to recent reports house prices in the UK have actually fallen for the last three months in a row - a move that many analysts had predicted would happen. The cost associated with purchasing property coupled with the effects of the credit crunch has seen a slump in the housing market, with many people losing interest in purchasing and preferring to rent instead whilst the financial markets stabilise. In addition to this the introduction of the controversial Home Information Packs has seen a reduction in properties going up for sale, which has also impacted on the overall housing market.
There are now concerns that after years of rising property values, the fall in house prices over the past three months could indicate that the housing market bubble is about to burst. Indeed, this is the prediction that has been made by some analysts. However, there are a number of different views on this, with different reports making different predictions with regards to how the housing market is going to be affected in the coming months.
By and large the general consensus seems to be that although property prices are coming down, and are likely to continue falling over the coming months, the prospect of a major house price crash is unlikely. The 1990s saw a house price crash that left many homeowners reeling. However, most analysts are predicting that although property prices are falling this will result in a more subdued market rather than a major crash.
Nevertheless, all signs point to the fact that house prices are going to continue falling, and this is something that homeowners need to bear in mind. This is of particular importance for those that are planning to purchase property for the first time in the coming weeks and are thinking of taking a 100% mortgage, as this could see you fall into negative equity more or less immediately.
