Up to recently I thought that the housing market would bottom out at around fifty per cent of its peak in the summer of 2007.
Now with a range of developments I am not so sure. There is surely the scope for a further substantial drop in prices.
The massive cuts in public spending, at about four hundred million pounds a year, will make everyone feel just a little make worse off even if they are not employed by the state. Add to that the freezing or cutting of benefits and it just leaves less money to support prices never mind boost them.
But in a sense that was known or could have been predicted.
What's new are the attempts by the Financial Services Authority to prevent those who can't afford to from getting a mortgage.
The plan to ban self certification loans which in recent years have accounted for half of all mortgages will surely reduce demand for housing.
Interest only mortgages are not being outlawed but you'll only get a loan if you can afford to pay it back which in effect means a reduction in the numbers of that type of mortgage.
House prices could level out at fifty per cent of their peak value but it wouldn't be surprising if they fell by sixty per cent from top to bottom. That would mean an average price of £100,000.
Views: 2148
© UTV News