The UK Property Crash and How Long it Will Affect the Markets
by admin on 24/09/09 at 10:16 am
It is no secret that the UK property market is experiencing a downward spiral. Many experts are warning that property prices can even drop to 25% in the next couple of years with the current credit crunch reeling its ugly head on the UK real estate property market. Certainly, this is not good news to those who have invested or are planning to invest on real estate properties in the UK. These developments have affected the way people plan their investments and purchases of real estate properties in the United Kingdom.
There are varying takes on the property crash in the real estate market. Some forecasting companies such as Global Insight think that the prices of real estate property in the UK can drop up to 20 percent or even higher in the next couple of years unless there Is no aggressive moves to counter the possibilities of a recession. Even real estate experts such as Knight Frank who are noted for being optimistic on the real estate market have begun to sing a different tune, warning of the dangers of the UK property market reaching a disastrous state.
While there are some who compare the UK property slowdown to what happened in the 90’s when house prices dropped tremendously, the prevailing sentiment is that the current conditions of the UK property market resemble the slowdowns experienced in 2004 to 2005.
No one can exactly say how long the recovery period will take. There are those who think that today’s situation will be similar to what happened in the 70’s, when home loans were restricted, causing the drop in house prices. If this prediction holds true, then recovery can happen in two years, as what happened during that decade. However there’s still the possibility of the crunch affecting everyone 4 years from now, especially if the credit troubles continue hounding the economy.
While the UK government has stepped up its efforts to intervene in the UK real estate property cash, including a £50 billion mortgage assistance, there are many real estate experts who agree that this may not be enough to boost the real property market. This is considering the extent of the drop in prices of UK real estate properties. It seems that the price crunch is being felt everywhere in the nation. According to the latest figures, prices of real estate have decreased by as much as 3% in the UK in the first three months of 2008. This means that for the past 12 months, prices of houses and other real estate properties have dropped by at least 1 percent across UK, the first time it has happened since 1996.
Almost all of those who are involved in the real estate market are severely affected by the property crash in the UK real estate market, except for those who are superbly wealth and thus, does not have to borrow money in order to buy or invest in properties. Small landlords, on the other hand, are feeling the effects of the property crash as this has affected their earning potential as well as access to credit since banks are tightening up.
