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Fears Of Housing Market Crash Among UK Residents

Recent research has revealed that almost a quarter of UK adults anticipate the housing market in the UK will crash within the next 18 months.

With recent increases in interest rates and rising personal debt levels 24% of those surveyed expect a slump in property prices within the next 18 months.

Debt consultancy firm Thomas Charles, revealed that 20% of respondents believe the slump may happen within the next year.

Adults under 30 year-olds were the most pessimistic with 27% anticipating a crash in property prices within the next 18-months compared with 23% of 30-50-year-olds.

Rising interest rates have also mad it more difficult for first-time buyers to get a foot on the property ladder with one in three potential homebuyers revealing they are postponing buying a property due to increased mortgage rates.

Commenting on the results of the survey, James Falla, director of Thomas Charles, said: “ the research shows that a high proportion of UK residents have lost faith in the stability of the UK housing market.

“ With interest rates rising and bad debt soaring, fewer and fewer people can afford to gamble with a mortgage. Young people are particularly affected since they are likely to have substantial unsecured debt and no equity, making it almost impossible to take that first step onto the housing market.”

Average house prices have seen an increase of 1.7% in November, taking average house prices to nearly £188,000. This average house price has seen British key workers, such as nurses and firefighters, struggling or in some cases unable to afford their own homes.

However, The Halifax believe that rising property prices will cool in the near future with the housing market stabilising.

Martin Ellis, chief economist at Halifax, said: “ The marked slowing in real average earnings growth over the past six months, and a squeeze on households' discretionary income due to the substantial increase in utility bills during the last year, should temper housing demand.

“ As a result, we expect house price inflation to ease over the coming months."

Recent figures from the Bank of England showed that the number of loans approved for house purchase had changed little in October compared with the previous month.

Also, the House Builders' Federation reported an annual fall in the numbers looking at new homes for the third successive month in October, indicating a drop in demand.

Alisdair Milton
9th December 2006


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