House price crash won't affect spending
A recent report has shown that most homeowners would not change their spending habits in the event that house prices fall.
The survey, carried out by the BBC, suggested that the majority of homeowners in the UK would continue with their existing spending habits even if there was a major fall in house prices. Over one thousand people were polled as part of the survey, and nearly 90% said that even if house prices fell by 10% or more they would not change their spending in items such as groceries.
Experts now wonder, based on the results of the survey, whether the UK economy would be damaged in the event that there is a significant downturn in house prices. The survey was carried out as part of a series that is looking into how property prices can affect people's lives in terms of their finances. Many experts had predicted that public confidence would be dented by a fall in house prices, and that this would have a knock on effect on the economy.
The survey results also showed that two thirds of consumers would not let falling house prices affect their decision to borrow money for purchases such as a car or holiday. The results of the survey has now cast doubt on predictions that the economy would take a big hit if house prices were to fall significantly. This is because the results seem to contradict predictions relating to the effects of house price reductions on confidence and the economy as a whole.
House prices have already fallen by 0.6% in September, and many economists have predicted that property prices will continue to fall over the coming months.
10th November 2007
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