UK house prices have risen in the month of January by 1.9% according to Halifax which on the surface appears to be terrific news. Especially considering there has been so much depressing news about thousands of people loosing their jobs.
Some people may think that 1.9% increase is not a significant improvement in the housing market, to put this in perspective average house prices decreased every month in 2008.
If this is a sign that the economy is improving, it may be that house prices have bottomed out and will continue to rise over the upcoming months. If this was true, now would be a great time to try to purchase a property, before property becomes expensive again. It is always important not to jump to conclusions or you may end up making a big mistake.
It appears that house prices have increased because there are very few homes being sold in the month of January 2009. According to the Royal Institute of Chartered Surveyors (RICS), in January there were less house sales than any other month on record, their records date back to 1978. Even though demand for housing is not strong, supply of homes is even weaker. Buyers have been forced to increase their offers in attempt to purchase properties.
We believe that house prices realistically could drop even lower, although the drop is likely not to be minimal. Now is a great time to purchase if your bank will give you a mortgage. When banks start to offer 90% mortgages it is likely that house prices will rise quickly as there will be many more buyers in the market.
Average yearly house prices have dropped by roughly 20% between February 2008 and February 2009 in England, Wales and London: