House Price Trends UK

The most startling feature about trends in UK house prices is there volatility.

Recent Trends in UK House Prices leave you with a feeling of vertigo.

UK House Prices 2007-2008

After the last boom house prices fell for 4 years before entering another boom.

Why are UK House Prices so Volatile?

• Limited Supply. Difficult to increase supply during period of rising demand
• Confidence plays a big role. When prices rise, people jump on the bandwagon. When prices fall, nobody wants to buy.
• Interest rate changes have big impact in UK, where mortgage payments play a high role.
• Shifts in mortgage lending. During boom periods mortgage lending criteria relax. When house prices fall, lenders become worried over negative equity so make it more difficult to borrow aggravating the fall in prices.

Future House Price Trends

- Will we have future Boom and Busts?

Probably, Many reasons for past boom and bust will remain in the future. Mortgage lending may be better regulated, but, the supply constraints, have if anything got worse.