The reason house prices are too high is a simple one.
The lending criteria from the banks which led to the current house price levels was based upon small deposits and interest only mortgages.
Now we have the opposite from the Banks, repayment only mortgages and 30% deposits.
So as Barratt Developments reported yesterday the new Govt scheme to provide a 20% loan matched by 5% from the purchaser has proved very popular with 100,000 people registering.
But it does not make financial sense to buy into a property you can't afford which will be reducing in price in a falling housing market.
Although rents are increasing at an annual rate of 4.1% it's still the better approach at the moment.
And probably will be for some time to come.
http://www.dunover.com/investments/index.php?topic=1223.0
We are renting and have no intention of buying until house prices fall significantly from their current levels.
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