Spending won’t be affected by house price crash
November 18, 2007
There has been a great deal of speculation over recent weeks regarding a possible house price crash in the UK, and many analysts have stated that house prices will tumble in the coming months.
September saw house prices fall by 0.6% unexpectedly, and this has further fuelled speculation of a house price crash over the coming months. Many think that a house price crash could see a real slowdown in the economy in general, as consumers battle to control their spending and rein in on their finances.
However, a recent survey carried out by the BBC has revealed that many consumers would not change their spending habits even in the event that house prices fell by 10% or more. As part of the survey over one thousand people were polled, and of these nearly 90% stated that they would not let a downturn in house prices affect their spending. This has made some economists think twice about whether falling house prices would affect consumer confidence and have a damaging effect on the economy as a whole.
The vast majority of consumers stated that falling house prices would not affect the amount that they spend on day to day costs such as groceries, and two thirds of those polled also stated that a fall in property prices would not affect their decision to borrow money to purchase things such as a holiday or a car. The overall results of the survey appear to contradict the predictions about a slower economy that were made by a number of analysts and economists.
Although one high street bank has reported that property prices unexpectedly rise again in October following the September fall, many experts still think that prices will continue to fall over the coming months.
Alan Wright
18th November 2007
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