An end to the madness of housing prices?

With the UK economy built largely on a housing bubble that is about to burst, are we finally going to see an end to the rocketing housing prices? The International Monetary Fund has estimated that we are paying up to 40% too much for a roof over our heads and the growing credit crisis is only going to have more of an impact on house prices.

In mid 2005 America’s housing market hit a slump. This was coupled with a huge rise in borrowing costs and saw many home owners unable to meet the cost of mortgage repayments.

It has been noted that the steep increase in housing prices in the UK has been met by an increase in wages, with people here now earning around nine times an annual average income. The Bank of England has attempted to cool inflation and stabilise the economy by raising interest rates five times since August of 2006, which seems to be working, but not before house buyers get themselves stuck in the ever deeping money pit.

Concerned home owners should note that housing markets in the UK have generally avoided a ‘bad credit’ mortgage market which collapsed the US, but that an increase in immigration and lack of housing, could continue to draw out the prices we are currently experiencing.