The recession has been around for a while now, and there is good argument to suggest that we are now coming out the other side. During the recession years many areas have suffered a drop in house prices after a very lengthy continual rise. Clearly this has caused some pain and many thought/think that the drop in prices had to come as the growth rate and price levels were unsustainable. We had got to that stage that:
1. First time buyers were priced out of the market.
2. Mortgages difficult to afford.
3. Poor interest rate associated with poor loan-value ratio.
None of these issues have really been resolved and the slight drop in prices has been matched by the recession-hit banks being more stringent with mortgage applications and tough interest rates for buyers with a low deposit.
But houses are selling again and the result is that prices are back on the up, with figures quoted in the press this week of a general rise of 9.9% (around 18% in London!).
So what does this mean and what are your thoughts on:
1. Can the rise continue or does the Bank of England need to step in?
2. Is this going to price more people out of the market and drive rents even higher?
3. How much further can the market realistically rise?