Crash possibility is very real
The housing market is on the verge of a crash according to analysts. The 12-year boom is almost certainly coming to an end, but experts fear a severe correction is inevitable.
If a crash were to take place it could wipe over 400 billion of the value of Britain’s housing market. It would also have devastating effects on UK homeowners, forcing many into bankruptcy or having their homes repossessed.
If it is to be as severe as the crash of the late eighties, then the average house could loose almost 40% of its current value, this would mean that many homeowners would be in a state of negative equity “where the value of their home falls below that of their outstanding mortgage”.
Another factor, which could make a crash all the more difficult to swallow, is Britain’s position with regard to consumer debt. Many people in the UK have relied on the strong housing market to support their debt fuelled spending, a crash would put such people who have remortgaged in a tight situation.
Other indicators pointing to a crash comes from reports that the FSA has ordered banks and financial institutions to assess how they would cope if the market were to correct itself.
Although a crash is still only speculation many experts agree that it isn’t a matter of “if” and more a matter of “when”.
