Is the UK House Price Boom Over?

After an unprecedented decade of rising house prices, it looks like the long boom in housing prices is coming to an end.

According to the Royal Institution of Chartered Surveyors, house prices in some regions have fallen for the first time since 2005. Whilst these price falls may be temporary and a result of volatile factors, there are many factors that explain why property prices may be set for a fall.

• 5 Interest rate rises are increasingly starting to have an impact on disposable income. The delayed effect is partly because many on fixed rate mortgages are now starting to have to get a new fixed deal at a significantly higher rate.
• Difficulty of first time buyers getting on the property ladder.
• Slow down in growth of households, especially in the north east.

London was one of the few areas to maintain rising house prices. The strength of the London housing market is partly due to the record levels of city bonuses. It is estimated city bonuses have reached £14 billion this year. However, with the turmoil in the stock market, it is likely this source of extra demand may start to slow next year. Nevertheless, combined with the factor of immigration pushing up demand in the South Easty, this year there has been an increase in the north south divide in house prices.

Will House Prices fall? 

Boom turning to gloom at Guardian