Falling house prices 'to hit half the country'
By SEAN POULTER - More by this author » Last updated at 01:02am on 7th November 2007
Half the country will see house price falls in the next 18 months driven by the knock-on effects of the worldwide squeeze on credit, according to a study out today.
Mortgage lenders are taking a much tougher line on the amounts they will lend and which customers they will accept.
Both factors take buyers out of the market.
On top of that, nervous buyers are expected to hold back to see what effect the credit crunch has on property.
A report from credit reference agency Experian predicts price falls in half of the regions by the middle of 2009.
It suggests the biggest fall, 4 per cent, will be seen in the West Midlands.
A 3.7 per cent drop is predicted for the East Midlands, 2.8 per cent in the South-West, and 2 per cent in Northern Ireland, which will put only a small dent in the remarkable boom seen in the province in the last two years.
Experian believes prices will fall by 0.7 per cent in the East of England and by 0.4 per cent in the South-East.
Spokesman Andrew Burrell said: "Five UK interest rate hikes since mid-2006 were already hitting consumer demand and global developments tighten the squeeze.
"The UK economy and housing market will become direct casualties of the current worldwide credit crunch."
He said Experian expected economic growth to slow from 3.1 per cent this year to 2.1 per cent in 2008.
"The downturn in consumer demand is more abrupt, with demand growing by less than 2 per cent year-on-year," he said.
"Only significant reductions in interest rates bring an upturn from 2009."
Mr Burrell added: "We expect the UK housing market to suffer over the next two years. House prices are forecast to record the lowest annual increase since the mid-1990s, while repossessions are also set to reach 15 year highs."
Experian believes the City of London bonus culture and property shortages will prop up the market in the capital, with prices expected to rise 6 per cent.
Scotland is also expected to see a big increase, 7.7 per cent, while the figure for Wales will be up by 3 per cent. Smaller increases are pencilled in for the North East, Yorkshire and the North West.
However, Experian warned that these areas could also be dragged down.
A company statement said: "The situation could turn out to be even worse. Lenders may come under further intense pressure to curb lending.
"This could easily spill over into the housing market and result in price falls in all regions."
A number of studies have predicted property market stagnation over the next two years. The International Monetary Fund has gone further and warned of a slump.
Citizens Advice outlined further evidence of the pressure felt by families hit by interest rate rises and increases in other household bills yesterday.
The organisation said it dealt with a record 1.7million debt problems in the past year, an annual rise of 20 per cent
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The end is nigh!
By SEAN POULTER - More by this author » Last updated at 01:02am on 7th November 2007
Half the country will see house price falls in the next 18 months driven by the knock-on effects of the worldwide squeeze on credit, according to a study out today.
Mortgage lenders are taking a much tougher line on the amounts they will lend and which customers they will accept.
Both factors take buyers out of the market.
On top of that, nervous buyers are expected to hold back to see what effect the credit crunch has on property.
A report from credit reference agency Experian predicts price falls in half of the regions by the middle of 2009.
It suggests the biggest fall, 4 per cent, will be seen in the West Midlands.
A 3.7 per cent drop is predicted for the East Midlands, 2.8 per cent in the South-West, and 2 per cent in Northern Ireland, which will put only a small dent in the remarkable boom seen in the province in the last two years.
Experian believes prices will fall by 0.7 per cent in the East of England and by 0.4 per cent in the South-East.
Spokesman Andrew Burrell said: "Five UK interest rate hikes since mid-2006 were already hitting consumer demand and global developments tighten the squeeze.
"The UK economy and housing market will become direct casualties of the current worldwide credit crunch."
He said Experian expected economic growth to slow from 3.1 per cent this year to 2.1 per cent in 2008.
"The downturn in consumer demand is more abrupt, with demand growing by less than 2 per cent year-on-year," he said.
"Only significant reductions in interest rates bring an upturn from 2009."
Mr Burrell added: "We expect the UK housing market to suffer over the next two years. House prices are forecast to record the lowest annual increase since the mid-1990s, while repossessions are also set to reach 15 year highs."
Experian believes the City of London bonus culture and property shortages will prop up the market in the capital, with prices expected to rise 6 per cent.
Scotland is also expected to see a big increase, 7.7 per cent, while the figure for Wales will be up by 3 per cent. Smaller increases are pencilled in for the North East, Yorkshire and the North West.
However, Experian warned that these areas could also be dragged down.
A company statement said: "The situation could turn out to be even worse. Lenders may come under further intense pressure to curb lending.
"This could easily spill over into the housing market and result in price falls in all regions."
A number of studies have predicted property market stagnation over the next two years. The International Monetary Fund has gone further and warned of a slump.
Citizens Advice outlined further evidence of the pressure felt by families hit by interest rate rises and increases in other household bills yesterday.
The organisation said it dealt with a record 1.7million debt problems in the past year, an annual rise of 20 per cent
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The end is nigh!
so no 250k cheap as chips
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