What's next for house prices?

House sales have fallen

House prices have increased by almost 13% in England and Wales in the past year, taking the cost of the average house to £149,935.

But the cost of buying a home is rising at a significantly lower rate, according to official figures from the Land Registry.

Prices were 12.52% higher in the three months from April to June 2003 against the same period a year earlier, but between January and March house prices were showing annual rises of nearly 20%.

Sales have also fallen by more than 16%, and recent property surveys have suggested is due to first-time buyers being priced out of the market.

Will the rate of increase of house prices continue to fall? What you think about the cost of buying a home?

This debate is now closed. Read a selection of your comments below.

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The following comments reflect the balance of opinion we have received:

I bought my house nearly four years ago for £150k. Now it's worth close to £300k. I bought it because I needed somewhere to live, but apparently the fact that the price is now high means I am a greedy homeowner and a fat cat because I made this unrealised profit due to luck rather than work (oddly though, people who win the lottery aren't fat cats or greedy). Perhaps people would like me to sell my house for far less than it is worth? If so, perhaps they would be willing to sell their car to someone for far less than it is worth. If not, shut up, quit moaning and accept that the more time you spend whining the less time other people spend listening to you.
John B, UK

It's simple - first time buyers should stop buying. As Chris S says, "cool demand". In fact, freeze demand and property prices will have to fall. The market cannot move without first time buyers, so every first time buyer moaning about prices but still continuing to buy in this ridiculous market has no-one to blame but themselves. And the rest of us will be blaming them too!
Fiona, UK

I am astounded at the "greedy Homeowners" and the "It's not fair" tone of some of these responses. Most people selling a house will be buying another so no profit is being made. It is buyers that drive the markets not sellers, if there is no demand, there would be no house price inflation, it is called supply and demand. If you cool the demand, then supply will stabilise as there will always be people wanting/needing to move house. What is needed is an improvement in the transport infrastructure so people no longer need to live near where they work, there by spreading the load away from the Southeast. Maybe Government can lead the way, and relocate away from London to, say, Nottingham. As for "it's not fair", well, yes you are right, but life is like that I'm afraid.
Chris S, UK

We just cannot afford to buy anything, and it's incredibly demoralising Jennie F, Edinburgh, Scotland

I would love to be able to buy my first home with my partner, but with our combined wage of £26,000 we just can't afford it! Edinburgh is ridiculous for house prices, they increase rapidly far beyond any rate our pay could keep up with, and it looks like we're going to have to leave the city to be able to buy anything. And even being able to buy out of town is dubious, as everyone else has the same idea, and prices there are going crazy too. We've worked hard though university and in our workplaces, but we're in a worse position than our parents were at our age. We just cannot afford to buy anything, and it's incredibly demoralising. We did look, and even put an offer in on one place, but with 1 bedroom flats going for almost £100,000, 50% over their asking price, we lost heart.
Jennie F, Edinburgh, Scotland

There are only two winners in the housing market, estate agents and solicitors and they keep bolstering up the market and coming out with jargon and surveys telling us everything is OK or at the worst "flat" continuously encouraging or bluffing the public, especially the first time buyers. It's all rubbish and the general public have to pay for it. It is virtually 100% certain that interest rates will rise, eventually, it's just the economic cycle. What goes around, comes around. Personally I hope for a massive crash, to help the next generation and force this government to do something about it. Until then and with interest rates at the lowest they are ever likely to be, prices will rise in the north, bounce along in the midlands until we eventually end up like the south-east currently, negative growth. Then when interest rates rise......
Ken Lucas, UK

Well, Neil Richardson from West Yorkshire, come to London my friend, and try and work out how a salary of £35k can buy an "average price" property of £250k. Or even a hovel of a studio at the top of a tenement building with one window, no carpets, a kitchen built into a broom cupboard and total storage space that's enough to hang 3 suits for £220k. Nothing to sit on for 2 years? I've rented for years and the only thing I've had to sit on for over a decade is by bed. I guess you're talking about those big rooms called living rooms? I'm fed up of people living in cheap areas not having the faintest clue what it's like to try and get onto the property ladder anywhere in the South East, especially London.
Catherine Rushton, UK

Property prices in the UK reflect investment rather than 'somewhere to live'. An empty property will give a return of 20% whereas a savings account give a maybe 3%. Our estate agents have opened offices all round the world selling UK properties, unseen, to wealthy investors (if you have to borrow the money to invest, there's clearly more risk). People in Britain don't comment on how nice their house or area is, they comment on how much it's worth, and how fast it's value is growing. When the entire country believes that they can make a 5%-20% annual return on their property for their pension or whatever, where's all the money going to come from?
Steve, UK

As Aztec Camera sang "Get Out Of London!" My wife and I did that 18 months ago. After looking at a one bedroom flat in Tooting for £95,000 the stupidity/obscenity of London property prices became clear. We moved to Bedford (only 1 hour away from London)and bought a 3 bedroom end of terrace with garden for £79,000. The best decision we've ever made!
Eamonn, Bedford, UK.

I'm 24, earn a good salary, and I'm getting married next year. It's absurd that our joint earnings will only buy a run-down small house out of town, so without a car, we can't even get to work. Plus if we don't buy soon, it seems like it will only get worse. Personally I'm resigned to renting forever.
Tom, UK

With all we are hearing about a dangerously low fertility rate, it is imperative that we sort out the problems in the housing market. People are much less likely to have children if they need two salaries to pay a mortgage. My parents bought a house in the era when it was still possible for an average income couple to be able to afford a property on one salary, even if they sometimes spent 50% of their income on the mortgage. I would like to believe that someone could get on the market, just by abstaining from things that cost money and working incredibly hard, but that is a myth.
Graeme Phillips, Germany, normally UK

Discourage ownership of more than one property and holiday homes Christian Tiburtius, UK

It is important to discourage ownership of more than one property and holiday homes as this is reducing the number of houses available and destroying some village communities. Amazingly second houses actually pay a reduced council tax, surely this should at least be double.
Christian Tiburtius, UK

I bought my house at the bottom of the last crash (1996), interest rate 8%+, for £50K. Very high repayments at the time. Spent the last 7 years renovating it. House now worth £160K. Repayments low. The sooner you get in the better. Stop being a snob, get out of the South East and buy something sensible to do up.
Kev, UK

I feel the cost of buying a property is about right. The world has changed and now both partners work. If the average property value is £150,000 then a joint income of £40,000 to £50,000 is required to secure a loan. With two average salaries of £21,000 per year this is definitely achievable. You however cannot expect to do this and buy the new car, go on holiday etc. Sacrifices are needed. Remember this is for an average (3 bed semi) house. For first time buyers 2 bed flats and houses would be cheaper. It seems to be a trend in today's society to say "It's not fair, I want this but I can't afford it. It must be somebody else's fault" Remember you are buying a home, not an investment. So what if the price goes up by 30% - so do other similar houses. So what if prices drop by 50% - negative equity is only a problem if you stop paying your mortgage or were trying to make a quick profit.
Craig Goodwin, UK

If we want lower house prices then we must build more quality homes. Once supply outstrips demand the prices will lower. Unfortunately there are a number of factors conspiring against this (planning law, weak government, not enough quality builders).
Scott, UK

If you want to stop ridiculous price increases, the solution is simple. Punitive taxation on profits made from property that are ahead of inflation. Unfortunately, for this to be successful, you would need to separate the sale of the interior fixtures and fittings, and the garden etc. from the property itself. This would make moving up the property ladder as difficult as getting on it, and therefore ease the pressure at the bottom.
Dave, UK

Even with growth as low as 10%, UK property is still a fantastic investment, add onto that some sort of rental income, and you can be sure that next year will be nearer 20% than a paltry 10%. Our estate agents are seen as investment brokers all over the world. For those waiting for a fall, it'll be quite a wait, a few years at least.
Steve, UK

The housing market has become more and more "stale" to single first-time buyers. I can't even afford a small terraced house in our area now, because I would need a mortgage for six times my salary to pay for a house, and clearly no bank or building society is going to offer me that. Looks like I am going to continue living with my parents for a significant time to come!
Andy, UK

I was intrigued to read that Matthew Baines fears he won't be able to sell his flat "as no-one can afford it". Doesn't this mean that his asking price is too high? I think that the problems for first time buyers have been partly fuelled by greed on the part of home-owners, who think that a rising market allows them to demand ridiculous amounts for mediocre properties and who refuse to consider that houses are only worth what somebody is prepared to pay. I'm one of the lucky ones because I bought my house before prices exploded, but if I were a first time buyer now I'd certainly be waiting for a correction.
Helen, UK

I will never be able to sell my first flat as no-one can afford it Matthew Baines, London, UK

I was a first time buyer, am now a second time buyer, but fear I will never be able to sell my first flat as no-one can afford it. My only hope is that a buy-to-letter may take it from my hands and allow me to ascend to that converted second echelon. Otherwise I see myself having to rent it out myself as the renaissance of the rental market is at least a benefit from the out pricing of first timers.
Matthew Baines, London, UK

I want a home, not an investment. I think many current homeowners are getting "£" signs in their eyes and estate agents and mortgage lenders must be loving it. The housing market is just another thing wrong with Britain. I decided to sit it out and save and I'm a little surprised the house prices are still rising, but I'll continue to wait until house prices fall to a fair price. I feel sorry for young couples looking to buy their first house.
David, West Midlands

I am fed up of hearing "first time buyers can't get on the housing market ladder." The problem is too many people expect to move into fully furnished, fully modernised houses in fantastic areas. People should be prepared to move in at the bottom of the market, houses that need work, and not expect to have everything immediately. Ask people of older generations about their first house. You will here stories of "having nothing to sit on for two years," "we put in the central heating and double glazing" or "we had to save for years for a deposit." Buying a house has never been easier. My first house cost £38,500 with mortgage payments of £292. My current house £88,000 with a mortgage payments of £353
Neil Richardson, West Yorkshire, UK

It's another example of the poor having to pay more for everything Rob, Cambridge, UK

Part of the problem is this obsession with big business that everything has to be based in the South-East, thus inflating house prices. It doesn't, particularly with modern communications. Second, to all those people who say that you don't have a right to own a house and that you should just keep saving, it's not that simple. My wife and I have been saving for a deposit for 3 years and with the current low interest rates and increases in property prices our savings as a percentage of a deposit are actually decreasing. We can't afford to save any more because our rent is so extortionate (far more incidentally than we would be paying on a mortgage). It's another example of the poor having to pay more for everything.
Rob, Cambridge, UK

After seven years living in Paris, I've finally bought an apartment in the city; just seven minutes drive from Place de Concorde and the Arch de Triomphe. Brand new, four bedroomed with a large lounge and large terrace overlooking Montmarte. All this for around £300,000. Coming back to England? Not likely.
Steve, France/UK

It won't be the high cost of housing that causes a correction - it will be basic economic factors. The reason that prices have increased is both supply and demand, and low rates. Just as fundamentals had to correct the stock market so it will be with housing and rates. In my view employment will be the key. While we are led to believe that employment is high the truth is somewhat different; the economy is loosing well paid jobs and the ones being created are low paid ones. How many city execs and IT workers are now in low paid jobs?
David Hill, USA (ex-UK)

My parents effectively 'doubled their money' when they recently sold the house they had bought in 1992. Are we seriously supposed to believe that the value of properties is now twice what it was ten years ago? All things are relative, and the only people who seem to think that prices will continue to rise are estate agents, mortgage lenders and those who have just shackled themselves with enormous mortgages. None of my friends from abroad can understand the peculiarly British obsession with owning property.
Iain, UK

We need more than a change in prices, we need a change in culture Toby, UK

If it's growing faster than my salary, I don't care how much it slows. Call me when growth stops, and then turns around, and converges with the rest of Europe. Until then, I'll be using my disposable income to enhance my quality of life. My advice would be to learn a language, move out of the country, and forget about the ridiculous obsession with houses, buy-to-lets, and treating your home as an investment instead of a place to live. We need more than a change in prices, we need a change in culture.
Toby, UK (working abroad)

I work in an estate agents handling properties at the top end of the market, and we have seen many price reductions recently. As someone who can't afford to get on the housing ladder myself due to the previous sharp increases in prices, I'm hoping that prices continue to fall. However, it is unlikely that they will ever fall to an affordable level for first time buyers. Looks like I'm stuck with renting!
Helen, UK

I bought a house 12 months ago and have watched it increase in value since then. I want to move but i can't decide if it's a good idea to sell! Will prices drop? Will they keep rising? The lack of stability is unnerving and i feel sorry for anyone wanting to buy their first place right now.
Paul Hardie, UK

If all the money in the economy is spent on houses there can be no growth in other sectors Cheryl, Bristol

With the average house price more than 5 times the average salary how are first time buyers ever expected to afford a nice home? If all the money in the economy is spent on houses there can be no growth in other sectors since there will be little money left to invest in anything other than a MORTGAGE, and Mort is French for death.. maybe of the economy.
Cheryl, Bristol

The government needs to do something to stop the price rises as the only people that benefit from increasing prices are people that inherit houses, people that are selling up to leave the country and of course, estate agents. Meanwhile first time buyers suffer. Everyone else might as well be in a stagnant market because if one house increases or decreases so do all the others. A huge tax should be imposed on multiple house owners to put a stop the buy-to-rent boom and also to stop Londoners from buying up coastal villages as holiday homes. This would ensure there are enough houses on the market and therefore reduce the prices.
Lee, UK

Such high prices in central London are simply unsustainable. I am not sure where house prices will go from here, but I know where I was going to go when I sold my 2 bed Notting Hill flat. For the same amount of money I bought a Grade II listed cottage in Wiltshire. No regrets.
Anon, UK

With the current economic climate it is all but impossible to accumulate a decent deposit Jason Miles, Reading, UK

My wife and I are looking to buy a home in the Henley-on-Thames area. We are renting at the moment, and it looks like we'll have to stay that way because there is no way on this earth that we'll get the sort of mortgage to buy anything around here. With the current economic climate it is all but impossible to accumulate a decent deposit. I work in this area and therefore need to live here. A lot of residents don't need to be here, but buy because of the perceived social significance attached to living in the Thames valley. Why anyone would pay an extra 10,000 to live next to a river that floods on a regular basis anyway is completely beyond me. Where's the 'status' in that? I really do despair, both for ourselves and for all other first-time buyers in the UK.
Jason Miles, Reading, UK

House prices are vastly over-inflated, and a disaster to many would-be first time buyers such as myself. Since it seems there are plenty of others in my situation (something that seems to have been strangely neglected in most reports until now) I wonder just what effect this will have in the next few years, with fewer and fewer people entering the market at the bottom.
Simon Challands, Manchester, UK

It seems to me that there are two possible scenarios for the future of the UK housing market. Either they will keep climbing and the UK will become a nation of Landlords and Tenants. Or, a far more preferable and likely outcome is that the property market will crash horrifically leaving devastation for the economy in its wake. Although this will be painful, it is preferable to the widening of the gap between rich and poor. The government should take responsibility for the looming crisis for their policies which have failed a vast proportion of the electorate and once again it will be the young and the poor who will have to pay the price for this failure.
Martin, UK

The overall long term trend has always been upwards and I can't see that changing Steve, UK

I think the rate of increase will continue to fall in the short term, possibly getting close to no increase at all. However the overall long term trend has always been upwards and I can't see that changing. While the low interest rates have made the cost of buying a lot cheaper, there are still other high costs like the unjustified stamp duty at 3% over 250K which hasn't changed in years. Also as the cost of houses rises more and more will fall into the 250K+ bracket which need reviewing.
Steve, UK

It is appalling how much it costs to buy somewhere to call your first home, particularly in the area where I live, but that doesn't mean that young property owners deserve to be dumped into negative equity, with all the associated problems that brings. My house is my home - not an investment, but it has the potential to ruin me financially. I think that as the media and others scare-monger about a possible price crash it may become a self-fulfilling prophecy.
G, UK

My girlfriend and I were lucky enough to be able to gain that elusive first step on the market this year, buying ourselves a modest 2 bed semi that was formerly a council house. Those around us are largely still tenants and seem to want for nothing. Few of them seem to work and they have a much better standard of living. Makes you wonder why we bothered...
Andy, Wales

A major factor in the housing crisis is the lack of council housing Ben Drake, York, UK

A major factor in the housing crisis is the lack of council housing. Very little gets built now and the government continue to push councils to sell off the stock they do have. This has led to a shortage of affordable housing especially for young people, which in turn is fuelling social tension and division. The government need to turn their policy around; stop privatising and get building!
Ben Drake, York, UK

Prices peaked at the end of last year, but are already down about 10% in the south east. It's just that that hasn't fed through into the figures yet, and estate agents and building societies are desperate to maintain the impression that the market is still buoyant. With any luck it'll all crash soon and we'll see an end to the obnoxious money-counting conversations and TV programmes about house prices.
Douglas, UK

My wife and I managed to buy a run down property a year ago in the capital. We have spent time, money and effort since into making it into a home. We bought our house firstly as a home, and secondly as an investment for the long term. Property prices indeed do funny things, but we believe a crash to be highly unlikely. It took us 5 years of hard saving to get where we are now. First time buyers need to realise that you don't "have a right" to own your home, you have to earn it. And unfortunately you may have to forgo some other pleasures along the way. So stop whingeing!
Tony, London, England

I don't think prices will continue to fall, if anything I think they will rise Tom Rivers, England

As a first time buyer I am finding it increasingly difficult to afford any kind of property that I'd actually like to live in. To rent is, in effect, to throw your money away so I have few options open to me. I don't think prices will continue to fall, if anything I think they will rise. Worse still I believe the increase in house prices will be far higher than the increase in the average salary over the next decade making it harder still. This is a worrying cycle that I can't see breaking.
Tom Rivers, England

We have put off everything to buy a house: a wedding, a family, holidays everything. Both my partner and I earn good money but we may as well earn less than 10k between us because until these greedy, selfish estate agents and home owners are stopped and admonished, we will never own our own home and that is heart breaking for us. We have been saving and saving and the interest rate on our savings account is a joke now. I absolutely agree with Jacob Busby's comments because there is nothing good about rising house prices, nothing.
Lisa, United Kingdom

Its an odd thought - but Maggie Thatcher's right wing Government brought in "right to buy" allowing hundreds of thousands of people from lower waged families to own their own house; whereas the current Labour Government, through no fault of their own, have overseen the complete removal of the chance to own your own home from young people of all classes. Just amused me as an unplanned consequence of progress.
Mac, England

Just sold my one bed in the South East to rent for a while. I can hear something, yip, here it comes....BANG! Common sense applied to basic maths which makes me so surprised at the people who are buying right now. Then again, in the South East owning your own home is oh so important to people. There is more to life people. What really makes me mad is the first time buyers who CAN get a one bed flat, but snobbery and an 'I want' attitude means they want to start in a four bed! Don't you have to start somewhere?
Craig, Scotland living in England

I'm glad house prices went through the roof. I'm an average earner and took the risk buying a house when everyone was told not to as prices will crash. Two years later I sold it for a decent profit. I immigrated to Australia and put the money on a house as a decent deposit. First time buyers maybe outpriced now, but the only way prices are continuing to go up is because people are still paying those silly prices. A house in the area of London I sold a year ago (Beckton) has gone up another 30K since.
P Gleave, Australia/UK

I and other people like myself are trapped in a pay more every year renting situation David, England

I've been trying for a while to get on the ladder but can find nothing in my price range. I'm currently paying £860pm for a rented property, which I can comfortably afford. If I obtained a mortgage my payments (at 3.5 times my salary) would be about a third of that, which would be great, but there are no properties around here that I can afford. I and other people like myself are trapped in a pay more every year renting situation, where we will never be able to buy when the system continues as it is. I hope it all comes tumbling down.
David, England

It's dreadful - I feel more and more depressed each month that goes by and prices continue to rise. I earn a decent salary but to afford anything decent in the South East I need to earn about 8 times as much. It's so unfair - I'm 31 and living with my mother (not the ideal situation for either of us). I might as well emigrate, as the situation isn't likely to improve any time soon.
Kerie, UK

As a home-owner, I hope they'll keep going up. However, I have some sympathy for people who aren't on the property ladder yet who are just waiting for prices to crash as they did in the 90s so they can afford to buy.
Tom Reeve, Southwest London

Why are we consistently told that house price rises are a good thing? Most people move up the chain because they have gotten a larger family or want to move to a nicer area, so they don't save any money because the next house up the chain will have also increased in value. The only people who make money out of the house market going up in value are Estate Agents (More Commission), Lawyers and Politicians (More Stamp Duty). Can you think of three groups of people less worthy of your money than Estate Agents, Lawyers and Politicians?
Jacob Busby, UK

I have resigned myself to the fact that I will never own my own house.
Neil Corbett, UK

This difference is the largest it's ever been, and will ultimately put a significant brake on the market Josh Bell, London, UK

Average house prices are now 7.5 times average earnings, whereas in the late 70s, they were only three times average earnings. This difference is the largest it's ever been, and will ultimately put a significant brake on the market. The market won't collapse, but I think it's likely to level off for the next two to three years.
Josh Bell, London, UK

I can't wait for them to crash. Wouldn't it be great if houses were so cheap again that everyone could have a realistic dream of living somewhere decent? We would all have a decent quality of life and not have such high mortgages to pay!
Dean, England