If there is any doubt that we are still suffering from the economic crisis that started almost 5 years ago, one just has to look around. There are still many friends, neighbours and even family members who lost their jobs in the last two years, and may have not been able to find another employment which was equally rewarding or well-paying. Many companies have also found themselves having to cut back on everything from Christmas parties, marketing budgets and sometimes, in desperation even some of their most valued employees. One can only hope that things get better, but for the moment they look some shade of grey.
Should we buy any house or wait for the market to improve?
Granted, the UK did not get hit as hard as the United States did five years ago. Across the pond, a speculative bubble was created around real estate, both residential and commercial and many people, ignoring the lessons from the past, foolishly took on ever larger mortgages, with the expectation that their house’s value would increase along with it. For a while, that worked. But then the crash came along, forcing many people from their homes and practically destroying many banks. If it had not been for the Obama administration’s intervention, many well-known banks would have had to close their doors.
Stuck in the Doldrums
It was only by the middle of last year that the United States finally began seeing some signs of life, both in their economy and in the housing market. Homebuilders reported renewed activity, and began some new housing projects, although on a much smaller scale than 10 years ago. They had obviously learned their lessons from the last several years, and rather than going for the jackpot, wisely decided to grow a little at a time, as if they were testing the waters.
The UK was fortunate enough not to feel quite the same amount of pain, although there were certainly devaluation in house prices across the country. Even with prices coming back down to what some might consider a sane level, residential real estate activity continues to be extremely slow. Figures released by HM Revenue and Customs indicate that the total activity for 2012 was just slightly more than the worst year on record, 2009. Last year just under 870,000 homes were sold, which is just a few thousand more than in 2009 itself. That year was the worst on record since results have been tallied, which was 1978.
Clearly, even with the housing prices beginning to stabilize in most areas of the country (except for London where they continue to increase), there just aren’t enough motivated buyers taking advantage of the situation. With housing prices slowly creeping up, even by just a fraction, some people may be waiting for further reductions before jumping in. But it may also well turn out that prices have hit the bottom and that buyers should start showing some signs of life.