House Prices May Dip Again
The housing market may take another dip as potential buyers struggle to get mortgages according to Bank of England policy maker Kate Barker.
The global credit crisis saw house prices in the UK drop by 20% at the lowest point as banks wary of risking new lending withdrew from the market and confidence was dented.
The market has however come back strongly since hitting bottom.
Barker, who has penned reviews of Britain’s housing supply and planning for the government and helps to set the interest rate said she had been surprised by the rebound.
“It seems more likely than not to me that mortgage finance is clearly not going to be available going forward on the terms it used to be,” Barker told MPs.
“I was rather surprised by the strength of prices in the housing market through last year and it’s possible some people delayed decisions to move or put houses on the market. In some sense that can’t continue.”
UK consumer spending and confidence is closely linked to the strength of the housing market. The housing boom meant many families could borrow against the rising value of their property to spend freely in the shops.
This has now changed and policy makers want to see consumers mover away from debt fuelled spending to better balance the UK economy to withstand any future similar hiccups.
The UK’s economic recovery may be more difficult without a strong housing market to support property demand and a better mood on the high street
“It’s possible the housing sector will be quite weak through this year,” Barker said, further adding that parts of the commercial property sector also looked vulnerable.
Tags: Credit Crunch, House Prices, Uk House Prices
