House Prices Essay

536 Words3 Pages
What Do You Think Will Happen To House Prices Over The Next Year? I n my report I will be looking into the housing market. I will be trying to analyse what has happened and what is happening and from this I will then predict what I believe the future of the housing market holds. I will look at the way the market has increased to see why this is such a huge topic to cover. In the last decade or so, house prices have been rising ruthlessly. This is great news for homeowners, but for first-time buyers or those eager to get on the market causes all sorts of problems. According to the Office of National Statistics, UK house prices have risen by 204% in the past decade compared with a 94% increase in average wages. Just a quick glance at these figures can reveal to anyone why people are having such problems getting on to today’s market. The prices have risen by 10% in the last year alone according to Halifax and Nationwide. Looking at the graph (pictured right) you can see that the house price to earnings ratio is at an all time high. In 2006, it stood at almost 6:1. This is more than double what it stood at 10 years ago when it was under 3:1. It is currently almost at a standstill, which is the cause of a lot of heavy debates. A lot of experts believe that the will be a very steep and rapid decline in house prices as the ‘global bubble’ bursts. However some believe it to hold its own and continue to be so high, or even slowly increase. In the late 80’s prises were too rising heavily and houses were very expensive for their time. But then a house price crash took place and in the early 90’s the price had dropped. If you look at the graph (pictured right) you will see that from peak to trough we can only see a 13% fall. However, if you take into account inflation then the fall is much larger. Some economists are predicting a 40% correction or more this time
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