Laura Howard, Tuesday July 15, 2008
The number of people moving house is at a record low as the mortgage clampdown takes its toll - but how long will the misery last for? Some experts predict a 30 - 40% fall in house prices over the next five years, while others say we’ll be laughing again by Christmas. We assess who’s right
There’s no doubt we’re in a housing downturn. The freeze on mortgage funding - and the high cost
of those home loans that remain - has seen the number of people moving home slump to a record low.
New figures from industry body the Royal Institution of Chartered Surveyors show that the
number of house sales per estate agent over the past month has slumped to just 15 - a record low.
And things are set to get even worse - if the latest Nationwide Consumer Confidence Index is
to be believed. The survey showed that 53% of consumers fear that house prices will fall
significantly over the next six months.
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Stateside worries
Prospects of an end to the current credit turmoil receded on July 14 when the US Government
announced it was to provide financial state support to ailing mortgage agencies Fannie Mae and
Freddie Mac.
The vast Government-backed lenders have more than 40% of US mortgages on their books - and
economists fear that the injection of funds could further exacerbate the freeze on mortgage lending
worldwide.
Indeed, some now already regard both institutions as effectively insolvent. Their official
collapse however, would throw the US housing market into even greater turmoil and see an already
weak dollar plummet.
Is the US Government’s intervention a sign of worse times to come for our housing market? Or
will we be spared the worst? We examine the evidence.
