Can we trust the property price indicators?
There is no doubt that the beginning of 2010 has seen some volatility in the UK property market with prices falling in February only to return to the growth path in March. Such is the volatility of these indicators that many experts are now discounting their strength and their usefulness in the current environment.
More and more people believe that a shortage of properties for sale in the UK is pushing prices artificially higher and thereby giving the impression that the worst may be over for the UK property market. While there's no doubt we have seen a genuine improvement in demand for UK properties, and no doubt prices have increased over the last few months, there is concern that a lack of affordable housing is impacting upon these indicators.
In order for the UK property market to return to anywhere near the level of transactions seen prior to the credit crunch we will need to see a massive increase in competition in the mortgage markets and more liquidity, especially for first-time buyers. First-time buyers are effectively the food and water of the UK property market and without them the market will struggle to recover. When much needed liquidity will return to the UK mortgage market is anybody's guess.
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