Another dagger (hopefully) into the high priced property market is that average interest rates are on the increase (And will continue to increase) despite the BoE reducing the base rate down to 0.5% over recent months. In January 2007 with the base rate at 5% the mortgage rate was 6.20% and now despite the base rathe shrinking to 0.5% the mortgage rate has rised to 6.23% !!! The main reason for these high rates is because the people in the know (apparently) are well aware of the current house price market and feel prices have some way to fall yet.

People say it’s all negative talk, but it’s reality. House prices are too high, first time buyers are out of the market, the plug is conituining to be pulled from the housing market.

It is quite clear what is happening in the housing market. Prices nearly trebled from 1997-2007; there is a correction taking place and the bottom will not be reached for some time yet.

If news reports filter to the media that there are ‘grass shots’ then these will inevitably come from those with vested interest in property and property gaining in value. As a buyer I would recommend that you wait at least another 6 months before you buy and even then you will still see a drop in house prices for another year or so. We have yet to see the market bottom out and remain flat, then will be the best time to buy.

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.

The government is trying to combat these fast increasing figures, but really are fighting a loosing battle as inflation still remains very high and the massive increase in job loses all round the country. Add to this that many home owners who pruchased over the last few years already see themselves in negative equity, times for home owners looks very bleak for the short to mid term future.

My personnel opinion? A lot of these repossessions are those that stretched themselves too far with their house purchase, that never planned ahead and thought about potential bad times that could lay ahead. Ones that never read the small print on their mortgages they took out, just lived for today and didn’t think about when the higher interest payment rates were to come about. Never saved, but just used their plastic friends to buy the new car, new kitchen, new flat screen TV’s, SKY TV fees, the holidays to sunny shores???

I just feel sorry for the very few that are genuinely hitting hard times, that did lose there jobs dispute many years loyal service and the inflation increase has taken them well above their comfort zone. That they now find themselves in negative equity and quite literally find themselves in a ‘no move’ situation or they admit defeat and give the keys to their homes back to the bank… but where some lose, some are to gain and at last young families can afford a house to live in as we see house prices falling, and as one house sells for cheap in an auction and somebody has lost everything, someone will gain a new start in life and a cheap property to live in.

If you were fortunate enough to sell at the height of the market or are a first time buyer looking to get into the property market then the times we are seeing now really fit the bill. Infact, as prices are falling, many experts say to carry on waiting and contonue to see price falls, even if you purchase now you could see your purchase reduce in price 20-30% over the coming year or two.

Local to where I lived, only a year or so ago, a three bedroom new build family style semi went for £165,000 and I see today after results in an auction by Cheffins in Cambridge, that an identical property in well maintained condition sold for £94,000. You do the maths! Just think how you would be feeling if you bought at the height of the market and your new neighbour moves in a year later telling you they paid nearly half the price.

House prices seem poised to fall substantially further as the fundamentals remain largely.

But Howard Archer, chief UK and European economist at Global Insight.

The Royal Institution of Chartered Surveyors (RICS) said its members sold an average of just 11.5 homes during the three months to the end of September – the lowest level since its survey first began in 1978.

Sooner or later all estate agents will not be overvaluing to get property onto their books as they did before, they will have to value at present day market conditions, or lower if they want to promise a sale.

If the government let things take their course, which is how the financial world turns, then a drop in house prices will be severe and why shouldn’t it be when the increase in prices over the past decade has been just as severe.

How long till we see the full extent of this property price crash, 2 years….. 8 years on some forums I have read, 5% drop in prices or upto 50%? Either way, it will be a good time to buy for the next few years as homes become more and more within peoples financial reach.

What ever happens we are due for a few years of zero to negative growth, don’t you think?