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The UK Housing Market's Boom and Bust
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by: Dave Saltonstall
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Word Count: 409
As house prices continue to plummet, currently at a 21% drop from their peak, it has become increasingly difficult for many first time buyers to buy a home. Even those with a 10% deposit saved already are still faced with mortgage rates of over 6% despite the bank of England base rate being at a record low of only half a percent.
The options are rapidly dwindling; it’s extremely hard to get a mortgage agreed and if you can the interest rates are not good for those borrowing 90%. So is our best option just to sit tight and save? Less than a year ago you could get over 6% for your savings in short term bonds but now as these bonds come to a close and people have to find a new place for their savings you’ll be lucky to get any more than 3% at most.
It is perhaps a good thing in the long run as even with the 21% drop in prices thus far it is reported that the current prices are still significantly over priced compared to their ‘fair value’. Is this just the economy’s way of putting things right again after the huge boom in house prices that was getting quite out of control? It will undoubtedly leave many home owners in a painful position with significant negative equity to their name, struggling to pay loans and many resorting to seeking debt advice.
In the long run it could still be a good thing for first time buyers so long as they can put up with the dreadful interest rates and add to their savings. In the US they have the advantage of a new leader and a potential full overhaul of their financial systems to find their way out of this recession but in the UK we are stuck with a Prime Minister who be it as PM or as Chancellor, has been behind the wheel the whole way through this recession, yet still refuses to take any responsibility for it repeatedly saying it is a “global problem.”. Some even think that bankruptcy is a still a very real possibility for the country, but even if we do have to wait for another 18 months before we can have a chance to put the reigns’ in someone else’s hands we still must hold onto our hope for that light at the end of the tunnel.
About the Author
David Saltonstall knows the in's and out's of debt, particularly the constricting nature debt can have on ones life -- Mr Saltonstall appreciates the value of debt-management and would like to direct you to debt-free.org.uk for advice and guidance aimed at curtailing and consolidating your debt levels!
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