The UK housing Market has a tendency towards being very volatile. The problem with this volatility is that it creates the potential for collapsing house prices. When house prices fall as rapidly as they are at the moment, it leads to negative equity and fall in confidence. Rather than having boom and busts in house [...]
The Housing Market is undergoing a painful readjustment with falling prices and exceptionally low transaction volumes.
In part this reflects the UK economy which is experiencing a steep recession and sharp rise in unemployment [See: UK Economy 2009]
There is a strong link between the housing market and UK economy. One of the main factors behind the [...]
This graph shows the sharp fall in house prices which have occured in the past few months. Most analysts expect further house price falls.
Mortgage lending still frozen. The number of new mortgage approvals is very low. The number of new mortgage loans is 52% lower than October 2007. (already by Oct 2007, mortgage approvals had [...]
House prices continue to fall. Home repossessions continue to rise. Banks are unwilling to lend mortgages and many homeowners are seeing negative equity. In the short term, the housing market is suffering from falling house prices and a great difficulty to get any houses sold.
The current housing difficulties have meant that the government’s target for [...]
Some features of the UK Housing Market and why the UK often experiences Housing market failure.
1. Volatility. The UK Housing Market is characterised by boom and busts. There is a cycle of rapidly rising house prices followed by a sharp crash. This volatility in house prices creates problems for the real economy. When prices rise [...]
Recent figures suggest annual house prices in the UK have slumped by 15%. However, these statistics may underestimate the true level of house prices.
The low volume of house price sales is indicative of the fact many homeowners are reluctant to cut prices to more realistic levels. Therefore, asking prices are inaccurate guide to the value [...]
The Global financial crisis continues to worsen the state of the UK Housing Market.
Shortage of credit, means that lending criteria remain very strict as banks are reluctant to lend any mortgages. The contraction in mortgage lending and fall in consumer confidence has caused a big fall in demand for houses. THe Halifax reports that house [...]
There has been more bad news for the housing market, with problems in credit markets getting worse rather than better.
In the UK, Bradford & Bingley has needed a government buy out. This will make the government the second biggest mortgage lender. When the dust has settled the UK banking sector will be much more highly [...]
The Housing Market refers to the supply and demand for houses, usually in a particular country or region. A key element of the housing market is the average house prices and trend in house prices.(see: History of House prices)
The Housing Market includes the following features
Supply of housing - quantity of housing strock
Demand for housing
House prices
Rented [...]
The credit crunch shows no sign of abating as Banks such as Barclays continue to post dissappointing results.
With the UK economy forecast to slowdown and unemployment rise, there could be a rise in mortgage repossessions and more bad loans for banks to write off.
A look back at the last 12 months of the credit crisis.
With House prices falling and the number of transactions dropping very fast, pressure is building on the government to introduce policies to help the beleagured market. Strategies include:
Freezing stamp duty. Home buyers would only pay the stamp duty after a delay of several years or when they sell the house.
Income support for those paying mortgage [...]
It is difficult to predict interest rates. The bank of England are being pulled in two separate directions.
Firstly, there is the real threat of an impending recession, due to:
Declining house prices
Rising costs of fuel and energy reducing living standards
lower consumer confidence
Natural end of business cycle
With unemployment rising and growth slowing, normally, the Bank of England [...]
Defaults on mortgages in the UK are still relatively low. The number of mortgages in arrears by more than 3 months is 1.1% or 129,000 out of 11,000,000 mortgages. In 1995 (when statistics started), the % with arrears was 3.82%. This was due to the higher interest rates in the early 1990s
However, the number [...]
In the short term, various measures are needed to stabilise the UK housing market.
The most important criteria is regaining a sense of normalcy to mortgage markets. Due to credit crunch and fall in confidence, banks and mortgage lenders are becoming unwilling to lend mortgages unless backed by large deposits. It means that many would be [...]