Falling Property Prices

Britain has experienced its biggest and longest period of growth in the housing market however this is almost certainly about to change. Comparisons are being drawn with the early 1990's when the property prices flopped and this brought about a significant recession.

Activity in the services sector is now said to be at its lowest since October 2001. The UK economy now looks extremely vulnerable to falling housing wealth due to the collapse in mortgage finance, which in turn affects residential investment and property transactions.

This means that the outlook for house prices in the UK is not at all positive. The Bank of England on July 3rd reported on a survey of credit conditions stating that lenders intend to restrict new home loans even more over the next 3 months.

Everyone involved in property is going to be affected by a downturn. This includes everything from homeowners, estate agents, landlords and lawyers to builders and their workmen. This ensure that a property downturn will have wider effects.

Inflation is beginning to rise and the Bank of England is limited to what it can do. In fact despite the problems in the economy dues to rising inflation the Bank may have to increase interest rates. This combined with the decrease of consumers’ purchasing-power due to soaring oil, commodity and food prices, the housing crisis looks set to cause significant damage to the economy.

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