The average house price in October was £162,038, which is comparable to early 2006 levels. In London this is even more pronounced, with Haart estate agents reporting that house prices rose by 10% in November increasing from around £274,000 to £302,000.
But the question is, are these increases just a result of increased demand being matched by low supply? Some analysts are predicting that we will experience further price falls of up to 7% in 2010. Their rationale is that the recent improvements in the property market are unsustainable and defy the state of the economy as a whole, with rising unemployment and poor credit availability still very much a problem.
Many predictably foresee that unemployment rates, stock market health and credit availability will be the major factors affecting the property market in 2010. If we don't suffer any more major financial shocks, many predict that property prices will decrease by around 2-3% with increases being as high as 7-9% in 2011.
The increases in 2009 have been down to all time low interest rates set by the bank of England, which have tempted the blessed who can actually obtain a mortgage to jump in and take advantage. As well as this rental returns are on the increase, this has been beneficial for cash buyers. Also last year the Council of Mortgage Lenders (CML) predicted that up to 75,000 homes could be repossessed in 2009, however, due to extremely low interest rates many have seen their mortgage repayments reduced, which has meant less forced sales and lower supply in the property market. This led to the CML reducing their previous prediction down to 48,000.
A factor which could impact the state of the property market is that the government might well have to cut costs in order to assist in balancing the fiscal stimulus, which has taken place. If this means cutting jobs in the public sector it could result in many people losing their homes. As a consequence this could affect public confidence in the economy, increase unemployment rates can cause over supply in the property market.
What is evident is that the performance of the property market can not be measured on a national level as this varies drastically. If you are thinking of buying or selling your house fast, look closely at your local area and how it has performed. Look out for areas which rely heavily on the public sector for employment as these areas could be at risk. And most importantly keep an eye on rising interest and unemployment rates any increases could spell further trouble.