UK house prices have always appeared to be a good investment. Some investors have ploughed money into bricks and mortar and pulled out of the stock market thinking that property is safe.
Ok if you look over the last few years it is a safe investment. But remember that house market can be just as unpredictable as the stock market. Property is a safer investment than the stock market however its not as safe as depositing the money in a bank account.
All good things come to an end and eventually things will even out. They call it a mid-cycle recession.
Does anyone remember the house price crash of 1956? I didn’t think so..
Take a look at the original spitting image video relating to the last housing crash here. The last property crash was endured for almost five years at the start of the 1990s. Property prices fell by a third and over 1.5 million homeowners were faced with negative equity.
Id like to report that we are indeed heading for another shocking fall in house prices in the UK. It may be 2008, It may be 2009 but it will almost certainly be upon us by 2010.
You may ask why. Why will the prices drop?
Well lets try to bullet point some factors
- Mortages have risen yet again this year stretching people with already stretched mortages to meet their payment
- Large amount of fixed mortgage deals have been abolished again pushing mortgage prices up
- Comparison of earnings again house prices. House prices in the UK currently stand at around 9 times average annual earnings
- Rising interest rates pushing up mortage rates further
- Rising UK Debt of 1.5 trillion – You can check out where we are on the CIA’s list of countries bank balances here
These are just a few factors that contribute.
If you still dont believe me why dont you head over to property snake. Property snake is a website that allows you to monitor dropping house prices in your area. You can enter your postcode to view properties that are dropping in your area. Click here to visit property snake.
Check out chris parkers house price crash movie here
What do I recommend?
Well I would suggest that you carry out some research and make your own decision. Primarily do not over stretch yourself when you are buying property in the UK. Make sure you have plenty of flexibility to allow for several mortgage rate rises. I would say to leave yourself at least 50% above your repayments.
Consider selling now to release your equity and rent a small property or room whilst you monitor the market. You could use some of the capital to invest in one smaller property to let out to a tenant. This allows you to keep a foothold in the property market but allows you to safeguard the majority of your equity. You could alternatively use some of your equity to invest in eastern europe (countries that are likely to join the EU). Countries that join the EU typically see 20-30% rises. Think outside the box.