Silver Linings By Jim Barnaby At Isnare.com Ezine Articles

That there has been a drop in house prices in recent months is largely agreed, even if some surveys, such as the Financial Times House Price Index, have consistently indicated a static picture. But the March figure of no change recorded in that survey, plus the February figures from the Land Registry which gave the same result, still amount to a fall of sorts, in the sense that as other prices rise and earnings increase the comparative cost drops.

Nonetheless, these surveys have been accompanied by other news suggesting a more significant drop in the market, such as the 2.5 per cent decline reported by Halifax in March. While it may be erroneous to read too much into one month's figures, many appear to have reacted just that way.

Such a reaction is wrong, however, suggested Liam Halligan, chief economist at Prosperity Capital Management. Writing in the Sunday Telegraph, he argued that there is no reason for panic, no crash in the offing - even based on the Halifax figures - and that, apart from that, a certain level of correction after a couple of boom years was a necessary event.

He stated: "It [the market] has over-heated in recent years and needs to slow. Were prices to flat-line, or even fall slightly, for a year or two, that would be a good thing, purging the system of excess."

Adding that the sub-prime situation was "not disastrous", he concluded: "The housing market is slowing, and prices could fall slightly over the next year or two - which is long overdue."

Such an analysis would bring with it a different perspective for anyone involved in property investment. If periodic corrections to the market enable the situation to stabilise, affordability issues to be addressed and a major boom-bust cycle to be avoided, then this could offer a better long-term prospect, whatever the short-term disadvantages.

Another, wider possibility for the market is that it will see a change in building trends, so that the markets which are oversupplied become much more evident and a shift takes place which sees builders concentrate on those segments of the market where demand remains high.

Such a phenomenon may be happening in Ipswich, according to the town's MP Chris Mole. Speaking to the Suffolk Evening Star, he noted that the price of apartments on the waterfront had plummeted, but suggested that the situation was the direct result of excess numbers.

He stated: "We think that the development of flats was necessary to kick start some of the regeneration of the Waterfront but probably for 2008 we have got as many as we need if not too many."

Mr Mole suggested that this could now have beneficial effects as builders turned their attention to the areas of greater demand, commenting: "If the correction encourages developers to return to more family housing developments then that would be something that I, and my colleagues in Ipswich, would welcome."

Therefore, while some appear to be shouting bad tidings from the rooftops, the reality may be very different. It may in fact be the case that, rather than being about to fall into a black hole, the housing industry is now gathering itself to regroup, realign and set itself up for the next spate of growth.

In today's world Property investment is an excellent investment option especially investment in UK

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