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Rock bottom or further to go?

Has the UK housing market finally plummeted to its lowest depths or is there still even further to fall? Tim Jackson gives us his thoughts.

Interest rates have tumbled, making mortgages cheaper. Northern Rock, HBOS, and Lloyds are pumping a combined £54billion of new lending into the market. The weakened pound is enticing foreign investors back into the investments market. This should all be favourable news. Yet in spite of all of this there is nowhere near enough lending going on to help strengthen the market again.

As fewer and fewer lending institutions are willing to loan money to customers, competition in the market has dried up, spelling doom for those wanting to take advantage of the stamp duty slash and get on the property ladder.

A 30k deposit on a 95% loan to value mortgage would have bought you a £600k property two years ago. Today you will be lucky to get a 75% loan to value mortgage which, incidentally, would only buy you a £120k property now.

In London there are no decent properties for £120k- there are barely any decent shoe boxes. In the capital we have reached a desperate crossroads in the market: Either the market will have to continue dropping until first time buyers can purchase with their meagre deposits or the banks will have to start offering 90% mortgages again. Neither scenario is ideal.