At the time of writing, UK house prices are falling following continuing increases of during 2006 and 2007. Some commentators are predicting that prices will fall by up to 30% from their summer 2007 level (See also the Housepricecrash website). But most experts are predicting falls of 10 - 15% in 2008, with further falls in 2009 but then rising to finish up to 30% higher by 2013.

Some economists point to demand outstripping supply continuing to support high house prices, others point to the credit crunch, fewer fixed rate mortgages and increases in fuel and food prices driving demand down.

As with any investment though nothing is certain but the time may be approaching when the time is right to get on to the housing ladder.

On 2nd September the Government announced a package of measures designed to help first time buyers struggling to get onto the housing ladder, support vulnerable homeowners at risk of repossession, and support the house-building industry.


In more detail the package comprises:

1. Mortgage Rescue

A £200 million mortgage rescue scheme being announced tomorrow is aimed at helping up to 6,000 of the most vulnerable families avoid repossession. This will not help those who have acted recklessly or irresponsibly. It is firmly targeted on those families who can no longer afford their repayments, and who would be eligible for homelessness assistance.

Local authorities will have a major role in this scheme assessing applications. Depending on their specific circumstances, eligible home owners will be offered one of three options:

Shared ownership: a registered social landlord buys a share (enabling the purchaser to pay off some of their mortgage) and coverts the property to shared ownership by issuing a shared ownership lease.

Shared equity: a registered social landlord provides an equity loan enabling the householders mortgage payments to be reduced.

Sale and rent back: a registered social landlord (RSL) clears the secured debt completely and the applicant pays rent to the RSL at a level they can afford.

The level of support the RSL will offer depends on the assessment of the individual's circumstances, which will include a review by a money adviser.

2. HomeBuy Direct

A £300 million scheme which will help up to 10 000 first time buyers into affordable homeownership over the next two years.

HomeBuy Direct will give eligible first time buyers keen to own a place of their own the chance to buy some newly built properties. Buyers will be offered an equity loan of up to thirty per cent of the value, co-funded by the government and the developer, free of charge for five years. As with other HomeBuy schemes, any first-time buyers whose household income is under £60 000 will be able to apply.

Not only will this help first time buyers, but it will also support the industry by identifying buyers for their new homes. This will help the housebuilding industry weather difficult conditions, so that, when the market recovers, they are ready to expand and get back on with building the new homes the country needs for the long term.

For more see the Communities and Local Government website

In a further announcement, the Chancellor announced that stamp duty land tax will not apply to purchases of residential property of £175,000 or less.

This seems like a bit of a knee jerk reaction to pressure from house builders, estate agents and others who have been calling for a freeze on stamp duty for properties costing up to the £250,000 threshold or even a total freeze. The number of home buyers benefiting will be limited and it is unlikely to make much difference to affordability. Currently the stamp duty is 1% for properties up to £250,000 and 3% on properties with a sale price of over £250,000. It seems likely that, in the current market, most sellers would be willing to Knock the selling price of a £175,000 home down by £1,750!

There are many things for the prospective home buyer to consider …the message as always is do your research!

It is now easy to research property prices yourself via the Internet. Look at the Land Registry website to see what is happening to house prices in your area - the housing market varies a great deal from region to region and from one town to another. Some types of property may face bigger price falls than others for example where thousands of two bed apartments have been built many snapped up by Buy to Let investors you may find prices down substantially on what they sold for originally.  Try to establish how long a property has been on the market and what similar properties have sold for recently.

You can easily find details of what houses have sold for in the past at www.hometrack.co.uk.

It is always worth making an offer and do be prepared to walk away if you think the seller is asking too much - this is definitely a buyers market.

We regularly report house price trends from various sources in the Money Jungle Blog or subscribe to My Money Jungle and get regular reports in your email box.

If someone is looking to buy a home, they will be looking around at or thinking about mortgages.

When someone applies for a mortgage, their credit report is searched by the mortgage provider. It’s essential for consumers to check their credit report. Inaccurate or out of date information may lead to customers receiving a higher interest rate (APR) or even being rejected by the provider.

CreditExpert from Experian, the UK’s largest credit reference agency, enables consumers to check their own credit report online FREE for a trial period.

Choosing a mortgage is a key decision. At a time when interest rates are rising it is worth looking for fixed rate deals but do looks at tie in periods and penalties for early redemption as well as set up fees. See the Mortgages page for more information.

You can minimise the risk with the right knowledge and experience and there are many people who can help to advise you further. Visit the business directory for a list of Money Jungle approved advisors and specialists.

Home Energy Performance Certificates

See DirectGov for more

See also Investing in Real Estate and Investing in Overseas Property.

Useful Links and Articles:

The Land Registry

UK House Prices
http://www.home.co.uk/

Home Information Packs are required for all UK home put on the market from 1st June 2007
www.homeinformationpacks.gov.uk

Buying a Property at Auction
http://news.bbc.co.uk/1/hi/business/5042378.stm

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