Reality in the UK housing market
Over the last few days we have seen some significant headlines from the UK property market with many analysts starting to turn more positive and liquidity returning to the sector. However, it is worth reminding ourselves that due to the substantial fall in UK house prices there are now more than 900,000 people in the UK caught in the negative equity trap. While the severity of their negative equity position varies substantially from person to person there is no doubt this will cause a substantial drag on the UK property market.
Whether negative equity buyers look to sell up, take a loss and move on or hang on until the UK property market recovers and then reassess their position remains to be seen. However, with potentially 900,000 homes possibly about to hit the market we could yet see a significant period of "penny pinching" where investors look for the best deals and refuse to chase prices higher.
While we are starting to talk in more positive terms about the UK property market it is worthwhile remembering that we have yet to see any significant movement in prices. True, we may be seeing a slowing down of falls across the UK but as yet there has been no significant shift into positive territory.
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