When Will House Prices Reach Rock Bottom?

Readers Question: I am British and live abroad but want to buy in the UK when the market hits its bottom prices. When do you feel that this will be?

It is hard to say, though I think another 12 months of falling house prices is likely.

If you look at historical UK House prices, in the last housing bust, house prices fell for 4 years. 1989 Q3 (£62,782) to 1993 Q3 (£50,128)

There were of course, some differences in the 1990s. In particular, interest rates were more important in the boom and bust; there wasn’t the same.

Next year, is likely to see a significant fall in interest rates which could make buying more attractive. But, the market needs to see mortgage lending become less stringent to really kickstart the economy.

The other factor is that the economy faces a serious recession and rising unemployment. This will lead to higher mortgage defaults and arrears.

My advice is to watch the market closely, basically, when national house prices start rising for 2 consecutive months will be an excellent time to buy into the market. I doubt there will be a double dip in house prices.

If house prices fall another 10-15%, there is great potential in buying for the long term. The current crisis has really caused a fall in the supply of new houses. When demand is able to return, prices could be pushed up again. (long term forecasts for house prices)

In recent data, house prices reached there lowest levels for 2 years, with prices falling especially in London and South East. The only good news is that property transactions increased 5%