My personal view is that the housing market is recovering. We've just purchased our 2nd property and already out and about getting new kitchen visiting B&Q & Wicks, Ikea etc etc... We've made the offer Feb 09, exchanged in June & completed in July.
Coupled with a knock down price the house valuation survey valued the property £12.5K below our accepted offer price. As you can imagine we feel we got an absolute bargain.
I should add we have been looking for approx 2 years and two previous places where we made offers got rejected. Subsequently both parties came back approx a month later accepting by which time with the constant 1-2% monthly falls we then had moved on to better bargains - bigger property at less price. IN FACT THE PACE OF PRICE FALLS HAS BEEN TREMENDOUS to our advantage.
Currently the property we have purchased is having damp treatment, to be followed with a good lick of paint internally and externally. Some attention to windows and guttering then we can move in. Then we are looking at decorating to taste. Best part of the move. New floors, curtains, furniture and so forth.
To cut a long story short house purchases are the biggest multiplier in an economy and just as the 1929 recession was brought to an end by housing boom I believe it will be likewise again.
Another colleauge at work has been trying to sell their property for the last 1 and a half years. Last week they had three viewings one after another and the first viewer came in with an offer £5K below asking price (2.3%) which was accepted. The buyer by the way is a cash buyer.
Rightmove have also announced similar stats where difference between asking and offer price is falling from 11% to 9%. Bear in mind these stats are lagging indicators.
I think over the autumn and winter period there is obviously going to be some slow down but bargain hunters are out there and recovery is well in sight. Next spring will be busier than this year imo.
All this aside, there is imo - impending inflation in the system. I don't see deflation at all. All the cash that has been pumped in to the economy will ultimately end up in the devaluation of currencies and movement of capital and revaluation of commodity & asset prices. There is no doubt in my mind just as after the oil shock of the late 70s house prices will rise. In inflationary periods tangiable assets will maintain value. In contrast I feel equity returns will be highly risky and limited in gains due to continuted conservative expenditures.
Finally, we are planning on letting the London property and possibly selling it near the olympics time around 2011-12. Living in Redbridge and only few miles from Olympics site we are feeling very optimistic about the regeneration of North East London.
In summary - as an active participant in the housing revival I am very bullish on property. Next year will be even better than 2009.