Housing Market Statistics
House prices 1977 to 2007 before the crash. Source: Nationwide
Notice the fall in house prices between 1990 and 1995.
Equity Withdrawal
- Equity Withdrawal - Equity withdrawal tends to rise during boom years and then falls as house prices start to decline. The house price falls of 2008, 2009 left many with negative equity.
Housing Affordability
Overpriced Houses
The housing Bubble was a global phenomenon. Overvalued housing markets
The Housing Crash
Housing Market and Economy
It is no conincidence that the fall in house prices led to a fall in economic growth.
Falling house prices depressess confidence and creates negative equity. It leads to equity withdrawal drying up and consumer spending falling.
source: ONS
Interest Rates
In response to falling house prices, the MPC cut interest rates to try and boost spending. But, even with lower interest rates, people didn't return to the housing market.
This was a reflection that even cheaper interest rates don't solve the shortage of finance experienced in the credit crunch.see: Credit Crunch Explained