UK housing market is set to hit 30-year low

Activity in the UK housing market is set to fall to levels lower than it has been in more than 30 years, analysts told the Daily Telegraph yesterday. Uncertainty among buyers and sellers is growing as mortgage costs rise and lending becomes more tightly controlled. According to information provided by LSL Property Services, experts are predicting that the limited availability of credit will significantly reduce transaction levels in the property market.

Analysts say the near collapse of Bear Stearns bank, combined with financial crises in New York and London, have put banks in a precarious position, as many are cash strapped and unable to borrow funds to assist them. Speaking to the Financial Times yesterday, head of the bank of England, Mervyn King said that the Bank of England was trying to find a solution to the problems faced by British banks. “The Bank of England is poised to take revolutionary action to find a resolution to the problems faced by British banks unable to sell or refinance portfolios of mortgage-backed debt”.

Market tension has increased in recent weeks, intensifying the pressure felt by banks. Experts have predicted that mortgages will be more difficult to obtain in the current economic climate, and that the housing market will falter as a result. LSL chief executive, Simon Embley, said consumers were also becoming nervous about the problem of affordability within the UK property market. “We have seen a number of lenders exit the market,” he added. Economists expect a 20% drop in the UK housing market this year.

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