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Supply and demand - Graham Lock, Housenetwork.co.uk

Supply & Demand - holding up house prices?

The property market has been under such a dark cloud in recent times that you could be forgiven for thinking that we are on the verge of some kind of housing market Armageddon.

Prices really started to tumble by as much as 20% after the highs of 2007 but in recent months we’ve seen prices not only stabilise but actually start to increase, it’s quite hard to believe on the face of it as most people expected prices to keep falling.

Without going into too much detail the signs of a market downturn are very much there to see, with banks struggling to lend, mortgages pretty much unavailable to millions of people, unemployment on the increase and the country being in the worst recession in recent times. This would appear to be all the ingredients needed for a natural reduction in property prices.

So what’s supporting the market?, one thing springs to mind immediately and that’s the lack of supply – like anything in life when a lack of supply is evident then prices tend to increase, this is definitely the case for property at present, there are so many people who didn’t move in the last 2 years that there is now a huge build up of potential buyers.

Many would-be property buyers were perhaps waiting for the big crash in property prices and that hasn’t really materialised – that’s not to say it won’t but perhaps people are now deciding to get on the ladder while they still can following the drop from 2007.

There are literally millions of people waiting to buy and every month that passes means that they can save a bit more towards that important deposit, with each passing month brings about more confidence in the banks and in turn they are beginning to lend more to customers and businesses which should increase the amount of jobs in the economy.

So all in all yes things are still pretty tough out there but there are signs of a recovery, you only have to look at the recent rise in stock markets in the UK and USA to see that a recovery could begin very soon. The big question for the property market remains - is this enough to sustain the current levels of property prices or indeed push them higher or will the market still encounter trickier times.

2010 will certainly be an interesting year what with the general elections thrown into the mix, but I’m certainly hoping for a sustained and controlled recovery in economic conditions that should help lead us all to a brighter future.

Graham Lock

Graham Lock, MNAEA, is co-founder of www.housenetwork.co.uk, a low cost nationwide estate agency which to date has sold over 2,700 properties using online marketing methods only whilst disregarding local newspaper advertising www.housenetwork.co.uk

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