Property Supply Limitations Are Key

Longer term house prices will go up in line with real wealth - as we get richer we all want a bigger, better house and then second home. Hence there will always be strong demand for the best properties, particularly well located family houses in London and the South East where new supply is severely limited. That said some of the froth will get blown off in the near term. City bonuses might drive house prices in Fulham but not everywhere else! Around the country during 2008 I expect some falls and stagnation as mortgages are harder to come by and confidence declines. But no immediate crash unless we fall into a recession. But I would steer well clear of City centre new build B2L flats.