subject: UK House Price on The Rise [print this page] All the signs say that property prices in England and Wales should be falling at worst or stagnating at best. But this is not the case. According to the latest Land Registry data, house prices in England and Wales rose 0.3% in August compared to July, and 6.7% compared to August last year.
Prices have been continually rising since April last year, leaving market bears and impartial commentators with bearish views confounded, because everything tells us prices should be falling, or should now be levelling after falling throughout 2009 and some of 2010.
The economy is weak, and unemployment high
The government is planning to cut millions of jobs from the public sector
Only people with great credit and a 10% deposit can get a mortgage
And prices have not corrected; homes are still well outside affordability norms
We know that historically weak supply compensated for low demand in 2009, but this year supply is rising, due to coalition government moves like abolishing Home Information Packs.
Still prices have continued to rise, seemingly proving the bulls right in the fact that record low interest rates will support the market.
Still a second dip cannot be ruled out. The government is planning on cutting millions of jobs from the public sector. This will increase supply and decrease demand. In fact it already is, the government's hesitance is keeping the blade above far more people's heads than will ever lose their jobs. No one buys or sells a house when their job isn't, or doesn't feel secure. Mortgage approvals have been dropping for the last few months, and prices could easily follow.
