There is now growing believe with economists that 2011 will see a house price freeze and even a slight reduction in prices.
Last year saw a growth in the value of houses of 6.4%, 2010, which seemed like a promising situation in many ways, considering the rest of our economy.
Household incomes have been very troubled with rises in all bills from petrol to home fuel, food shopping and insurance. Its all gone up. Couple this wanting to purchase a home in the knowledge that prices could be going down over the next few years and you could be left with a mortgage that is larger then the value of the loan originally taken out to buy it with.
Then there are the banks with their understandable issues with lending money and how much and who to. They are uncertain which way the market is going to go and are exercising heavy caution to lending the public money.
Its understandable when they are thinking there is a possibility that lending someone 200,000 UK pounds today may result in them owning them this and the purchaser only owning a property worth 170,000 UK pounds in 2 years. Put that together with them noting the interest rates may be on the rise this year which effectively equals purchasers mortgages shooting up. When this happens its inevitably that there will be a lot of lent to households that will not be able to keep up with their monthly mortgage repayments and end up defaulting on their home loans.
So looks like it could be a tough year all round. Its certainly an interesting one for many including the banks.
Hopefully all will be well and this too shall pass, only time will tell.
Daniel Zane London.
Daniel Zane is owner of London property inventories one of the UK's leading suppliers of property inventories.
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