The UK housing market has enjoyed record price increases. Since 1997 house prices have increased by more than 217%, and in many areas by much more. However, evidence increasingly suggest that house prices are set to fall. Last month, March 2008, house prices fell by 2.8%; giving the lowest annual house price inflation since 1999.
Many analysts point to the fact that House prices are now Overvalued compared to many historical data. In particular, many first time buyers do not have sufficient affordability to be able to get on the property ladder. This article – Overvalued Housing market points out some reasons why the UK housing market may be set to follow the experience of the US.
The precipitating factor for the change in housing market sentiment is the credit crunch which has made mortgage products scarce and led to a fall in mortgage lending. This bodes ill for future house price data; these recent falls in mortgage lending will increasingly be reflected in lower prices.
U.S. pending home sales went up in April 2010 beyond expectations as purchasers signed contracts to get a federal tax credit. The National Association of Realtors’ measure for pending sales of used homesincreased by 6.0% to 110.9 in April, the industry group said Wednesday. The gain was the third in a row. Economists queried by Dow Jones Newswires had expected pending home sales would jump in April by 5.0%. First-time home-buyers acted in time to beat the April 30 deadline for the tax credit. Lawrence Yun, NAR’s chief economist, said sales this spring seem as strong as those last fall, before the original expiration date.