The Housing Market is undergoing a painful readjustment with falling prices and exceptionally low transaction volumes.

In part this reflects the UK economy which is experiencing a steep recession and sharp rise in unemployment [See: UK Economy 2009]

There is a strong link between the housing market and UK economy. One of the main factors behind the current recession is the falling house prices. As house prices fall, consumer spending tends to decline as confidence evaporates and people can no longer re-mortgages. The recession is making the house price fall even worse, creating a negative downward spiral.

House Prices in 2009

The negative momentum in house prices will continue throughout 2009. See: predicted house price falls

Mortgage Lending in 2009

Mortgage lending is currently at an all time low. The government is trying to put pressure on banks to revitalise mortgage lending. Whether this is successful will have a big bearing on the future of the housing market

New Home Builds.

The government has a target of building 240,000 homes a year, but, the construction industry is in recession and the number of new houses coming onto the market is likely to be very low. Due to the time lags involved in building houses, this is creating a shortage of housing which will be a problem when housing market recovers.