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Will we see property prices start to soften?

Despite the fact that the vast majority of property surveys in the UK have been fairly upbeat there is growing concern about unrest in the market. There are a number of issues which are coming to the surface which include the general economic malaise in Europe, the slow recovery in the UK as well as an increase in the cost of debt for mortgage companies.

When you bring all of these factors together they have the potential to create something of a nightmare scenario for the UK property sector in the short to medium term. It is highly unlikely that the UK economy will move into a strong growth phase without the assistance of the UK property sector with so many UK consumers and UK businesses having large exposure to this area. Yesterday we saw Lloyds Bank issue a new standard variable mortgage rate which is significantly higher than the existing standard variable rate. Is this a sign of things to come?

There is no doubt that if the cost of finance in the international money markets continues to creep higher, partly because of the European debt crisis and specifically the Greek problem, there is no way that banks around the world can take on these extra cost without passing some of it over to consumers and businesses.

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