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What will happen when more properties come onto the market?

As we have covered over the last few weeks, a number of property experts believe that the UK property sector is set to move higher in the latter part of 2009 and may actually move into positive ground compared to prices at the start of the year. However, cynics suggest that much of the increase in the "average price of a UK home" is primarily because of a shortage of quality homes on the market which has forced buyers to bid against each other therefore pushing prices higher.

The concern is that as the UK market recovers we will ultimately see more people look to bail out of their properties and potentially downgrade or realign their mortgage arrangements. A sudden influx of new properties onto the market may well test the nerve of property investors and could ultimately halt the rise in UK property prices in 2010.

Let's not forget that UK banks also have significant bad debts relating to mortgages and customers who are heavily in arrears. Once they see a glimmer of hope in the UK property market there is no doubt that UK banks will look to swamp the sector in order to try and reclaim as many of their bad debts as possible. This is not a simple scenario and there is no simple solution.

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