With the UK economy still on the mend, the effects of financial strain have stretched across the nation. While many of these effects are negative, there may be one which benefits many UK citizens. Since the UK’s economic troubles began, house prices and renting prices have been falling. However, many vendors were at first unwilling to offer houses at lower prices. Currently many vendors are offering prices which are down more than 20% from the 2007 peak and sellers may need to go much lower in order to get a sale.
The phrases “buyer’s market” and “renter’s market” are being tossed around since prices plunged 23% between September 2007 and April 2009. However, many owners are still asking prices that are much too high and housing economists admit that the market is still being overvalued. Estate agents are losing their jobs due to lack of sales and only the owners who are willing to accept greatly reduced prices are making sales. Discord exists between the market and asking prices, but better properties are now coming on the market at better prices. Experts suggest that house prices will continue to fall, perhaps even more steeply than last year.
While the housing market is in disarray, the renting market is also going through some changes. Landlords are being forced to drastically lower rent in order to attract and keep tenants. There is currently an over-supply of rental properties and many landlords are left without renters. The outlook is good, however, for renters. The increased volume of the renting market provides excellent fodder for rent negotiation with new or current landlords. Renters have the ability to negotiate lower rents with different landlords and present them to their current landlord. In order to keep their tenants and rent their properties, landlords must accept lower prices.
As price reductions in the housing market continue to cause confusion throughout the UK, economists believe that the problem may not be quickly resolved. Some suggest that increased unemployment rates may force housing prices to drop further over the next year. However, combined with the receding economy, rising unemployment may lead to higher mortgage defaults. While some economists foresee a drop in interest rates over the next year, it is difficult to predict when the UK housing market will hit rock bottom. Until the economy improves, the housing market may not reach a stable point from which to improve.