Fri 18th Jan, 2008
House price crash finally here?
This is probably a burning question for most of us out there since our house is not only a roof over our head but also the largest investment we will probably ever make.
Up until 8 months ago it appeared as if the house price boom would never end with over a decade of record breaking growth in house prices.
However more recent figures coming out in the past two months paint a gloomier picture. If you are a mortgage holder then this could be a cause of great concern as you may end up owing more on your home loan than the value of your house: i.e., negative equity.
Meanwhile the US has seen a decade of growth starting to turn and house prices in many areas of the US are falling as the global credit crunch takes its first victims. Right now in the US there is a record number of mortgage defaults and this is going to start having an effect on us here in the UK as the cost of borrowing goes up.
The Royal Institution of Chartered Surveyors (Rics) has said that nearly half of its surveyors saw price falls in December, the worst figures since late 1992.
Interest rate rises and a tightening of lending criteria are thought to be the main causes of the market drop, with lenders reporting a drop in loan approvals.
The Halifax and Nationwide also reported seeing a weakening of the property market, and recent Government data from
“The housing market is clearly feeling the pinch from the credit crunch and the round of interest rate hikes in 2007,” said Rics spokesman Ian Perry.