Tuesday, 25 September 2007Can the UK avoid a house price crash?
It's been a rollercoaster week for investors, but the property market should survive the credit crunch. The Northern Rock crisis has dented confidence in the housing market but most analysts still predict a soft landing rather than a crash.
Signs of a slowdown have been on the horizon since early summer, long before 'credit crunch' and 'subprime mortgages' became part of the standard dinner party lexicon.
In the four weeks to early September - just ahead of the Northern Rock turmoil - asking prices of homes on sale in England and Wales were already dipping.
According to property website Rightmove.co.uk, asking prices dropped by 3.1% in Yorkshire and Humberside over this one-month period, by 3.3% in the South-east, and by 4.1% in the South-west.
Even in Greater London, where the market has been red-hot, asking prices in late August and early September dropped 2.5%.
'This month 121,000 properties came on to the market - the lowest figure for a September since 2004,' explains Miles Shipside, commercial director of Rightmove.
He says this drop in business will put a brake on the market but it does not mean that prices will fall significantly.
Which is not to say that a tumble is impossible. Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors said there is still a 10% chance of steep falls although a 12 to 15-month period of stagnation is the most likely scenario.
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