It is greatly predicted that house prices will continue to fall well into 2010, a further 10% than figures of present. There is not be any kind of recovery until 2012.

The Council of Mortgages Lenders recently released figures showing a nearly a 50% drop in mortgage approvals at the beginning of this year compared to last year. This goes inline with decreasing mortgage options, rising umeployment, more repossessions, more bankruptcy etc, etc. First time buyers are drying up at the bottom of the property ladder and the chain above them is weakening. Yes, Halifax did their best to stimulate interest in the property market by recentl releasing headlines that houses are now affordable more than ever, “Housing affordablility has trebled since prices began falling 18 months ago”. But are the Halifax just staing the obvious?

If house prices have fallen, then why would they not become more affordable? Would it also be correct to state that house prices will be even more affordable in 18 months time?

Whatever the future holds, it would seem that house prices are due to fall even further to go inline with demand and affordability. Banks are more regulated now days and there are very few lenders out there which offer silly rates of 10 x your salary borrowing, we are now looking towards more sensible lending rates of 4 x salary borrowing…. obviously house prices must accustomize themselves to this fact.

Estate agents will no doubt yell from the roof tops on the slightest hint of positive news from the housing market, but my suggestions is to take your time and compare. What is on the market today is very much likely to be what is on the market still next month and even cheaper!

Prices were allowed to spiral upwards at too faster rate on the back of nothing, but a ‘feel good factor’ under the Labour government. People were spending credit as opposed to their earnings. Each year increasing their mortgages to accommodate their new upgrades on cars, multiple annual family holidays and plasma televisions in every room. These kind of people added to the national debt and now find themselves in negative equity (rightly so?) and are now starting to loose their treasured possessions (which they never really owned or worked for?) and the worst case scenario is many situations, repossession of their property.

Yes, many people will feel sorry for the ones losing their homes, but just how many of these people are actually in this situation for genuine reasons? How many of them simply spent, spent, spent with absolutely no regard for future finacial situations?

People tag them as vultures, but these people that are now buying up cheap property from auctions and taking advantage of giveaway prices of cars etc because other people are trying to stay afloat should be looked up to and thanked for having been safer with their spending. Families that studied their monthly bills, never were tempted to take advantage of their limitless credit spending, that may even have rented foreseeing this property price crash, are the ones that will profit.

I think that over the next 2-3 years house prices will adjust to or maybe even below the inflation band. At present it will be those with cash that are king and those that borrowed too much that will be poor. This unfortunately is a cycle that has occured many times before and it’s a cycle that will continue in years to come.

Is it the time to buy now? Should we sit on our hands and wait? Should you sell you property now to avoid the crash? Will it get worse….. it is widely predicted that it will.