Do you want to know what is going to happen in the UK
property market in 2008?
This UK property predictions article endeavors to give you
an insight into what is potentially in store for property
investors and homeowners in 2008.
Firstly let's take a look at what happened in 2007 and the
early part of 2008.
The debacle of what happen in the subprime mortgage crisis
sent a shock wave through the financial World. There were
many causalities, probably the most notable to date in the
UK is Northern Rock.
Any business that relies heavily on debt and borrowed money
has been hit hard. Banks and financial institutions are
tightening the purse strings and property investors are
feeling the squeeze and many are nervously looking at other
ways to reduce the risks in their portfolio. Investors are
particularly nervous if they are coming to the end of any
fixed term mortgage agreements.
There is a good chance new mortgage rates will not be as
favourable, hence potentially taking thousands of pounds
out of the investors pocket.
Are we on the road to another recession?
Many people are looking at the property market crash of the
1990's and are wondering if we are heading down the same
route now.
The bottom line is that there is always a chance we could
be going down that same path; however, the likelihood of
this happening today is currently very slim. The reason
being that when we look at the property market of the
1990's compared to now, there are two big contributing
factors that aided the crash that aren't present today,
these are:
1. Unemployment was sharply on the rise.
2. At their peak, interest rates were almost 15%
How is capital growth going to be affected this year?
All indication are that property prices this year will be
much flatter than they have been for a long time. Indeed
we are beginning to see sequential months of the average
property prices in the UK actually going down.
However, locations such as Scotland and London are still
bucking this trend. For short-term capital growth there
are no real safe bets at the moment, but the safest of what
is on offer tends to be in Scotland and down south in
places like London.
Nonetheless, there are still location in the UK that are
potentially undervalued and should still see a slow but
steady price increase this year.
What are the facts?
While the media is predicting negative equity and zero
percent price rises this year, the truth is nobody really
knows what the future holds.
However, when it comes to UK property predictions, history
does prove one thing. It proves time and time again that
the media hasn't got a clue and is often wrong. Their job
is to sell newspapers and get people to watch their TV
program and often the most profitable way to do this is by
selling doom and gloom.
At the heart of the UK property market is the basic law of
supply and demand. So, while demand far out strips supply
then we can confidently predict that long term prices will
increase. There are other economic factors that have to be
taken into consideration, but as a general rule, this law
normally holds true. However, that is not to say that in
the short term they won't remain stagnant or even go
backwards.
The Good News.
The bank of England has recently announced it is pumping 50
billion pounds into the financial sector to try and
revitalise the mortgage market. This is an extremely
proactive and unprecedented measure to try and keep the UK
economy as stable as possible.
Now, it may take several months for property buyers to feel
the benefits of the money, but long term it should help to
ensure the economy does not end up in the same mess as it
did in the 1990's.
The Conclusion.
Even though 2008 is likely to be a volatile year for
property owners, for the astute investor who has a big cash
reserve and knows where to locate the undervalued
properties, because of less competition from other
investors who are trying to sit out the current uncertainty
in the market, this year could prove to be one of their
most profitable ever.
----------------------------------------------------
Carlton Johnson is a well respect author and investor - to
learn more about where to find undervalued properties and
how to buy them cheaply visit the
http://www.investment-property-guru.com website, for all
the latest investment property tips and advice.
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