Od :
Pre :

Buying Property in the UK

With property prices soaring in the last couple of years, it has become very difficult for first time buyers to step on the property ladder. This sentence is a cliche that everybody in the UK has read on every page of every property magazine or the supplement of a newspaper. However, the situation is changing.

Property market in the UK has started to slow down in the second half of 2007 and the latest figurek from the Land Registry showed that the house prices in England and Wales dropped by 0.4% last month for the first time since August 2005. Year 2007 brought an overall rise in prices of 6.7 %, only a fraction of the total rise since 1996 – 350 %. The market has been significantly slowing down and for 2008 experts predict either no rise in prices or even a drop in prices by as much as 8 %.

Credit crunch is another weakening influence for the property market. Unwillingness of banks to lend money to each other cuts financial resources available for mortgage lending. Figures for November and December 2007 show drop in mortgages approved across the banking sector. There has also been a rise in a number of houses sold through property auctions due to repossessions. Credit crunch, over-cautiousness of banks and cuts in mortgages approved are unfortunately quite bad news. The two cuts in interest rates by the Bank of England in December and February, bringing the basic interest rate down to 5.25 %, is much better news.

;reklama;

The weakening market coupled by the credit crunch and slowdown of the UK economy have brought about a drop in prices and numbers of sold houses, a cut in approved mortgages and a rise in repossessions. The current average price of property, as published by the BBC, is £230,747. Watching the development on the market, many prospective property buyers have decided to hold back and wait for a couple of months anticipating the following development on the market:

• Further drop in property prices.Various experts predict the market price of properties to fall further or, at best, remain the same. Buying a property at the moment, the buyer may face a deflation in the value of a newly purchased property in the next couple of months.

• Further cuts in interest rates could occur depending on the strength of the economy, inflation, development of various sectors of economy and most importantly on the decision of the Bank of England’s Monetary Policy Committee.

• Rise in number of repossession properties on propery auctions. Many buy-to-let property owners failed to keep up with repayments of their mortgages and their properties had to be put back on the market. Experts expect a further rise in repossessions that could lead to more reasonably priced properties on offer at auction houses. It is advisable to use the slowdown on the market to consolidate your finances, should you be thinking about buying property in the UK. Keep an eye on the developments in the next couple of months, research your mortgage possibilities and give a good thought to what exactly are you looking for. This year, the prospects are not too bright for property investors but should you be looking for a property for yourself, the slowdown in the market might finally give you a chance.

By Otília Šimková
Photo: iStockPhoto