Are UK House Prices Going to Rise This Year?

Remember back in 2005 and 2006? Four or five years ago UK house prices were at an all time high. In some areas, such as London, they were deemed ridiculous. Then the credit crunch hit and they began to fall quite rapidly.

As the UK slowly moves out of recession and into recovery, there have been signs that UK house prices may be heading back to their dizzy heights again, as they begin a slow but steady crawl upwards.

But why are house prices rising and can we expect them to reach the peaks of yesteryear?

The main reason for house prices rising is due to supply and demand. Since the credit crunch hit, confidence in the UK housing sector has been very low. Many people have been reluctant to get into the market because of fears of a second crash.

A couple of years ago it was very much a buyers market. Few people were looking to buy, given the state of the economy, and those wanting to sell were forced to drop their house prices considerably.

Now things are a little different. As confidence is being restored, more people are interested in purchasing a property, but due to a lack of new builds and a reluctance by some people to sell their properties – those who “might” have before the crunch decided not to afterwards – there is a shortage of properties on offer.

It’s no secret that the government has failed to meet its house building targets and this is only adding to the shortage of housing supply.

Because of this shortage, those people who are selling their house have free reign when it comes to what they charge. Many sellers have received over the odds for their property, as buyers have gotten desperate.

These sale prices are recorded in house price indices, so the general picture is that house prices are rising.

However, the new build sector is slowly picking up and as confidence returns to the market, more people are marketing their properties, thereby tightening the gap between supply and demand.

In addition to this, some government initiatives, implemented to stabilise the economy, will shortly be coming to an end.

These factors mean it could be that house prices stabilise this year, rather than continue to rise. Some experts are even predicting this current increase in UK house prices is artificial, as it is being forced by a lack of sellers and by government schemes.

These experts say house prices could fall this year before beginning to rise again in 2011 or even 2012.

If you are considering getting onto the housing ladder this year, first make sure you have good finance in place and will be able to meet the repayments.

Also, look at the various house prices indices from banks and building societies and examine any trends.

Finally, when considering UK house prices, remember a property should not always be seen as solely for investment purposes. If you like the property, you think the price is reasonable and you could see yourself living in it then you should make the sale.