UK house prices

According to the Telegraph, the house price correction in the UK is now over, so everyone can relax. They reference a report by the Centre for Economics and Business research which apparently states, house prices will actually “grow,” between the fourth quarter of 2009 and end-2010 and that, “there is a good chance that they will rise even more quickly, thanks to the unprecedented collapse in new homebuilding.”

Quite how they come to this conclusion is beyond me and there are of course, no actual figures to back any such claim. We are all aware that median house prices in the UK  are rising slightly as the amount of sales falls dramatically, but to suggest (once again) that all is now well and house prices are rising just demonstrates the desperation amongst the traditional media purveyors.

Having been reading similar stories and headlines for the last two years, any one who takes this as a sign to jump into the market as an investment needs their head examined. Several issues are still to be overcome before any house price recovery can possibly occur. Mortgage financing is still difficult to come by, unemployment is on the rise, and lest we forget, average house prices in Great Britain are still around six times average salaries. This ratio is nowhere near sustainable unless Northern Rock is prepared to start offering no deposit, 125% loans again. Which seems unlikely as their current default rate is going through the roof. The low interest rate may be making people stay put, but this cannot continue indefinitely.  Bide your time, offer low and have cash available – there will be plenty of bargains around over the next 18 months.