UK House Prices have Bottomed, And Our Survey Said...

The UK housing market has bottomed and there will be a slow and steady return to growth as supply gradually increases. That is according to a Reuters' poll of 30 financial analysts at banks, investment firms and consultancies in the UK. The analysts further said that house prices would end this year just a little lower than they started it, with a nominal growth in 2010, and 2.5% growth in 2011.

A similar survey, taken just 3 months ago suggested that house prices would fall 8% this year, and stay flat next year. And that is an example of how reliable these surveys are. I am not questioning the credentials of those surveyed, simply of the anonymous group survey; respondents are under no pressure to get it right.

In my opinion; it is entirely possible that house prices will end this year without falling too much further, but it is inevitable that house prices will endure a period of further falls.

As the last Hometrack report showed, the current price rises are coming from big rises fuelled by short-supply in 11% of the country (mainly in the south west), everywhere else is still falling albeit slower than before. This is because transactions are still at massively low levels and the mortgage market and unemployment situation are preventing this from changing anytime soon.

In my opinion, house prices will not be growing again until at least 2011, but that shouldn't stop people from selling their house to trade up or downsize, says Richard Mckay director of UK property private sales site Zungalow.com, he writes on the company blog:

"The UK is absolutely obsessed by house prices, but it is all much of a much-ness; if you have the right attitude you can do just as well out of the current housing market as you could in 2006.

"There are people who are refusing to sell their houses because they won't get the peak price for it, even if they bought the house years before and could still make a profit at a 30% discount on peak, they are sitting on it, depressing and waiting for better days.

"The fact of the matter is, house prices are relative. That is to say, all houses are falling in value, so by the time you sell up, remortgage and buy the bigger house your family needs, you will end up paying the same amount in mortgage repayments as you would at the peak in 2007."

You can't argue with his logic, if we weren't all as obsessed with house prices and house price growth, we probably wouldn't be in this mess now.