As you would expect from a period in which worldwide economies have been battered by the credit crunch, there has been much comment about a possible fall in the UK housing market. While on the surface the signs and elements are there for a significant fall, what is the situation underneath the surface?

While the doom and gloom merchants are having a field day, the situation under the surface is no where near as bad as you might think because of a number of factors which include :-

Demand v Supply

Even though there has obviously been a fall in demand for houses with fewer buyers in the market, there has also been a fall in the number of people looking to sell. So in relative terms the fall in demand has to some extent been offset by the fall in the supply of houses to the market.

Result : Neutral

Interest Rates

There is no doubt that the recent worldwide trend of falling interest rates is set to continue, with UK rates set to fall in February and possibly later on in the year. A lot may depend upon inflation and the state of the housing market with regards to further falls, but the trend is definitely down.

Result : Positive

Housing Associations

More and more people are using housing associations as a vehicle for the purchase of their homes, whereby the housing association will fund part of the purchase price of the property for a share in the asset.

Result : Positive

The only real unknown factor which will come into play at some stage is the economy and how it will perform over the next couple of years. If the economy were to slowdown significantly then this would hit the employment market which would have a negative impact on the housing market. This could possibly overshadow all of the elements we have mentioned above.

There is no doubt that the UK economy is entering a very tricky period, but the housing market for the moment is holding fairly steady to the surprise of many.