UK Property Market Overview

Since the beginning of this century the UK property market has grown more than many could ever have predicted, and has been one of the best performing markets in the world.

Similarly to other countries the property market has been driven by wide availability of cheap and flexible credit, a lack of supply and a rising population. The UK economy has been strong and unemployment very low.

Like in other western countries the property price growth has had to stop as prices just could not go on rising. This has been compounded by the credit crisis that is facing many banks around the world, which has lead to the mortgage products being massively curtailed.

Banks now demand a much higher deposit, have increased their risk premium on the interest rates, fees are higher, products are less flexible and the number of products available has shrunk significantly.

This in effect means that many now find it almost impossible to get a mortgage and with prices falling fast (not to mention uncertainty around government regulations) demand has dried up fast.

We expect property prices to fall further and the market still to be in a difficult predicament throughout 2009.

Although property prices across the country are falling the rental market is buoyant and rental prices are even increasing in some areas.

Buying off-plan is a near dead strategy in the current climate. The best opportunities will come from buying repossessed property, auctions and properties at significant discounts to the market value (if this can be determined).

We believe that the fundamentals of the market are still good (eg population growth, poor supply and an economy that will rebound quickly). We predict that there will be some exciting opportunities, perhaps in 2009 if not 2010, as the UK property market starts to bottom out and mortgage providers regain confidence and improve their products.