No house price crash, according to experts
While some of the gloomier recent headlines carried by the press have appeared to suggest that a "house price crash" and a "property collapse" are inevitable, new research suggests that these doom-and-gloom stories might not so much be misleading , as entirely wrong.
Earlier today, the UK's largest mortgage lender released a trading update ahead of its planned sale of new shares. HBOS - parent company of Halifax and the Royal Bank of Scotland - is planning to make available £8 billion of extra new stock over the next few weeks, and confirmed that the sale was "going ahead". However, contained in the update was an authoritative prediction on house prices - which suggests a small decline rather than a crash.
According to the lender, the property market will be "flat" and "subdued" across the year - hardly surprising when the economy as a whole is in the midst of one of the biggest financial crises since World War Two. However, even the downwards pressure of the credit crunch not drag house price declines down into the double figures, with costs only expected to fall by nine per cent.
Meanwhile, the Council of Mortgage Lenders (CML) also released a report today, detailing lending patterns across the past month. Its headline finding - that there would "not be much change" in the market over the rest of 2008 - also seems to preclude the possibility of a dramatic crash. In fact, the CML even forecast an "improvement" in professional mortgage and other home loan availability before the end of the year.
According to figures from the report, the remortgaging sector remains strong, with householders successfully securing new professional mortgage deals from firms. The CML also said that the "vast majority" of borrowers remain in a "strong position" to make their repayments, due to strong market fundamentals such as high employment levels.
"This is not a return to the early 1990s," the report added - referring to a previous house market crash. "Fewer people have bought at the top of the market this time round, and earlier price rises have given the vast majority of mortgage holders a sizeable equity cushion in their homes. In addition, there is no reason to expect most people in this position to do anything other than continue to pay their mortgages in full every month."
Michael Coogan, CML director general, said: "The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news."
Perhaps referring to the near-constant credit crunch-related stories appearing in the media, he added: "The next few months will remain very weak for house purchase activity for the funding reasons, which are now well rehearsed."
Earlier today, the UK's largest mortgage lender released a trading update ahead of its planned sale of new shares. HBOS - parent company of Halifax and the Royal Bank of Scotland - is planning to make available £8 billion of extra new stock over the next few weeks, and confirmed that the sale was "going ahead". However, contained in the update was an authoritative prediction on house prices - which suggests a small decline rather than a crash.
According to the lender, the property market will be "flat" and "subdued" across the year - hardly surprising when the economy as a whole is in the midst of one of the biggest financial crises since World War Two. However, even the downwards pressure of the credit crunch not drag house price declines down into the double figures, with costs only expected to fall by nine per cent.
Meanwhile, the Council of Mortgage Lenders (CML) also released a report today, detailing lending patterns across the past month. Its headline finding - that there would "not be much change" in the market over the rest of 2008 - also seems to preclude the possibility of a dramatic crash. In fact, the CML even forecast an "improvement" in professional mortgage and other home loan availability before the end of the year.
According to figures from the report, the remortgaging sector remains strong, with householders successfully securing new professional mortgage deals from firms. The CML also said that the "vast majority" of borrowers remain in a "strong position" to make their repayments, due to strong market fundamentals such as high employment levels.
"This is not a return to the early 1990s," the report added - referring to a previous house market crash. "Fewer people have bought at the top of the market this time round, and earlier price rises have given the vast majority of mortgage holders a sizeable equity cushion in their homes. In addition, there is no reason to expect most people in this position to do anything other than continue to pay their mortgages in full every month."
Michael Coogan, CML director general, said: "The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news."
Perhaps referring to the near-constant credit crunch-related stories appearing in the media, he added: "The next few months will remain very weak for house purchase activity for the funding reasons, which are now well rehearsed."
