House prices are in a state of flux for both new buyers and those attempting to find family homes. If you’re thinking about purchasing a property read this first.
House prices today are in a state of nervous expectancy. First-time buyers have seen buddies and family members get their fingers burnt and get caught in the negative equity trap. Similarly, average home prices have gone up to a point where some families are despairing of ever finding the space they require for their kids to reach adulthood in.
Realtors and the govt are now keen to allay the public’s fears and to point to a level of bigger stability, where house prices are levelling out and rising and first-time buyers are being offered a bunch of tasty options in their search to gain a foot on the property ladder, particularly by developers and the govt
But there’s reason to take care. Some industry commentators are advising that prices cannot sustain themselves at a level that is unaffordable. This level is usually known to be equal to around 3 times an individual’s income. Once property values surpass this level, it is thought that they are going to come back down ultimately.
Given that a modest London salary is roughly £20,000 and those with some experience may be able to earn north of £30,000, it’s obvious that house prices, whether these are for lofts for couples and first-time buyers or for bigger family houses, are at present well above £120,000 i.e. Three times £30,000.
With the present level of commercial uncertainty in the UK due to the current recession, which some professionals are now calling a ‘depression’, the weakness of the pound against other currencies, and low levels of work, with many individuals defaulting on mortgages, some are forecasting a ‘double dip’ recession.
This would imply that, a long way from having reached their final low level, home prices are experiencing a temporary hike. Over the approaching years, they could then take an even greater dive to levels that are closer to three times the average salary. First-time buyers may then see prices at a level where they’d be able to purchase a house and sustain a mortgage.
Of course, you would have to be a clairvoyant to envision what the future holds in terms of house prices. Nevertheless many industry leaders are now advising buyers to hold off till the market settles down a little more. There’s also a stand-off in that sellers are reluctant to put properties on the market at a price lower than they paid themselves.
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