It’s well known that in UK real estate, local real estate markets are falling because individuals and real estate agents may have inflated views of property values. With sales volumes that can be up to 50% lower than the average, the average price of homes for sale is definitely trending downward. Another factor that’s contributing to this growing downward tendency is that many sellers tend to have an inflated idea of what their properties are worth and for this reason, they reject larger numbers of offers. The difference ranges up to about 30%. A seller who’s offering ?100,000 for a UK Real Estate property and receives offers in the range of ?70,000 is highly likely to reject them.
Sellers Are A Major Part of the Problem
People just don’t listen when real estate brokers or banks tell them their home value has plummeted after 10 years of appreciating. Some properties lose 20% of their value every year. One writer on the real estate services markets put it this way: “Sellers have to listen to advice, but they aren’t, and that means properties aren’t moving.”
Costly Real Estate is Suffering Too
Another shocking aspect of this trend of UK Real Estate is that even high-end properties designated as “super prime” are not immune. Super prime properties are those valued at over 10 million pounds. Foreign investment helps slow this process, but any real estate agent will tell you values are still moving lower. Rental prices are also dropping as more and more super prime properties flood the rental market.
The Banks and Lenders Have to Take Some Blame
Even though the government is supporting insolvent banks the mortgage rates are rising. Bank of England recently raised rates from .2% to .5% despite interest rates dropping – meaning there’s no benefit to consumers. The banks say all the other banks are raising rates, so they can’t lower theirs. Lloyd’s even raised the Bank of England’s lower rate. Whether or not this is true, it’s still bad news for real estate in the U.K. And it’s even worse news for consumers who are seriously looking to buy Real Estate.
Taking Part in Property Management Corporations
There is another option for those who don’t warm to the idea of investment clubs: property management companies. Key to those who dabble in these companies is the fact that they have experience in rental investments. You can reap rich rewards from rental investments, if you’re willing to assume risk. The rental property investment involves both residential and commercial real estate investing.
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