Interesting article her in the Times - A Year in Housing. It offers a look back at a roller coaster ride for the UK housing market.
Lookback at Housing market for 2007
Despite conservative predictions for house prices in 2007, the first 6 months saw unexpectedly large rises in house prices as as average house prices touched £200,000.
The main driving force behind the rise in house prices was a lack of supply coupled with a change in demographics and increase in number of households.
The rise in house prices of 11% occured despite 2 interest rate increases
The Summer of Discontent
The first signs of trouble came from across the Atlantic. There was a sudden realisation that upto $300 bn worth of sub prime mortgage loans might never be repaid. It was not an issue that directly affected the UK housing Market. Generally, the UK mortgage sector is sticter with lending. However, many banks now realised they may not be able to sell on their debts so easily. This particularly affected the Northern Rock building society. By late September the Northern Rock were forced to borrow from the Bank of England. - something last done in the 1970s. This caused a flood of nervous investors seeking to withdraw their money.
This panic caused a shift in consumer confidence. Also higher interest rates started to bite and affect the affordability of mortgages. Therefore, demand started to drop, causing the first significant falls in house prices for many years.
The Big Question for 2008?
How much do house prices need to be corrected by?
Forecasts for House prices in 2008, vary from -35% to +6%
1 comment so far ↓
Interest rises have a delayed effect, 2008 should see that effect more which is why Sterling has dramatically dropped against the Dollar and Euro recently due the anticipation of interest rates cuts to follow, more help at http://www.mortgagebestrate.co.uk/
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