Possible house price crash causes increased fears

 

May 15, 2008

A number of officials have expressed concern over the possibility of a house price crash in the UK similar to that seen in the 1990s. Officials have said that if something is not done to ease the problems in the mortgage market the likelihood of a house price crash is set to increase, and this is causing increased fears amongst consumers and industry officials.

The problems in the mortgage market have been causing problems for many months, since the onset of the global credit crunch. The government has already taken action in order to try and ease the situation, by ploughing billions of pounds into the money markets and by coming up with a plan that will allow mortgage lenders to exchange mortgage based assets for government bonds. However, there are still concerns that the problems could continue, and this could impact heavily on the housing markets as a whole.

According to one industry official failure to tackle the problems in the mortgage markets could result in disaster, and if the government’s recent plan fails to work then a major house price crash could be closer than many think. He said: ‘An ongoing lack of mortgage funds could trigger a price crash if an increasing number of sellers are forced to seek rarer mortgage-free cash buyers or those with large deposits. As well as being thinner on the ground, these buyers will be able to demand larger discounts.’

Information from Right Move, the online property specialists, has shown that house prices have been falling in April on an annual basis for the first time since 2002, when the company first started taking records. There have been many reports that have shown that house prices have been falling, and they are set to continue falling over the next couple of years according to some industry officials.

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Written by admin · Filed Under Mortgages 

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