Take a walk through most city centers or waterfront areas such as the Thames and you will see numerous tower cranes, most of which are used in the construction of one-, two- and three-bedroom apartments. It begs the question: are developers building too many of these types of homes, or is there still strong demand? In some areas of the country there is simply an oversupply and some proposed developments have been put on hold altogether.

Places like Leeds, Nottingham, Leicester and Ipswich, which have developed intensively, are now recognized as being in only modest demand. The prices of these properties are highly dependent on supply and demand and in areas of oversupply prices are plummeting. Both aspiring and experienced homeowners have purchased many apartments as buy-to-let investments and in oversupplied areas there may be dozens of properties for every potential tenant. This has caused the value of these properties to drop, but the mortgage payments remain the same. Rents in oversupplied areas must be lowered to attract tenants and often don’t cover monthly mortgage payments, meaning they become an even less attractive prospect for potential investors. Some property investor gurus have been predicting a fall in apartment prices for a few years, will their predictions come true in 2008?

The question can be answered simply by looking at the overall supply and demand for property in the UK. The government estimates that approximately 230,000 new homes are required to be built each year to cope with our growing population, but in reality only 160,000 are being built, leaving a 20-year shortfall of over a million homes. People are living longer due to healthier lifestyles and there are a growing number of single people due to our modern lifestyles and values. People are less likely to stay in a rocky relationship these days and much more likely to opt for single life for a while. Add to the equation, a shortage of job skills and the requirement that foreign workers take up residence in the UK and, in the long term, it looks like there will be very strong demand for affordable housing.

There seems to be a hiccup in the housing market at the moment, which is due to the lending companies, i.e. banks and building societies, which we are told are facing liquidity difficulties and are tightening their lending criteria. loans. In the United States, several banks have failed and in the United Kingdom, Northern Rock has recently been nationalized by the British government. Some lenders are not passing through interest rate cuts to tracker mortgages following the Bank of England base rate cuts, which they say is due to the ongoing liquidity crunch.

All of this makes for interesting times ahead. The general consensus seems to be that in the short term, house prices may fall or at least not gain much in 2008, but in the long term, supply and demand will keep prices rising.