Submitted by Anonymous on Wed, 10/31/2007 - 17:23.
45,000 homes in the UK expected to be repossessed
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Council of Mortgage Lenders has warned that up to 170,000 people are expected to struggle with their mortgage payments next year and 45,000 homes are expected to be repossessed as increases in interest rates hit those whose fixed-rate mortgage agreements are coming to an end.
At the same time house prices will edge forward by just 1 per cent in 2008 and property sales will fall by 15 per cent - as first-time buyers find it more difficult than ever to get on the property ladder. And the latest figures show mortgage approvals have already fallen to their lowest level since 2005, adding to speculation that the crisis at Northern Rock and the credit crunch is hitting the overheated UK property market.
While house prices in Scotland are expected to continue to rise at a rate of 3-5 per cent next year this represents a considerable slow down in a market which has been increasing at a rate of 10-15 per cent in recent years.
And there are fears of the impact on the wider economy, which is currently buoyed up by the property market and funded by consumer credit.
Vince Cable, the Liberal Democrat Treasury spokesman and acting leader, said: "After a decade of often unsustainable borrowing, the slowdown in this housing market shows that the British economy is heading for rockier times."
He accused Prime Minister Gordon Brown of allowing banks to engage in "ever-more reckless lending" to drive growth and added that by not including house prices in inflation figures, Mr Brown had ensured that interest rates remained artificially low.
"The government must act now to curb irresponsible lending practices if the economy is to have a soft landing rather than a crash," he said.
Howard Archer, chief UK and European economist at Global Insight, said there was now a "very real risk" of a price crash. He said: "Evidence is now coming pretty thick and fast that housing market activity is being squeezed by a combination of tightening lending standards resulting from the credit crunch and the increasing affordability pressure on house buyers coming from higher interest rates, elevated house prices and modest real disposable income growth.
"Slowing housing demand is expected to increasingly feed through to significantly dampen house prices over the coming months. Indeed, there is undeniably a very real risk that the housing market could see a sharp correction."
Archie Stoddart, director of Shelter Scotland, a housing and homelessness charity, said: "With thousands of people across Scotland likely to shortly come to the end of the fixed rate period of their mortgages, the reported increase in repossessions is something that is likely to get worse.
"Many people may have overstretched themselves to get a foot on the housing ladder - and as such the slightest change in circumstances can push them over the edge."
CML director general, Michael Coogan, said: "The housing and mortgage markets are facing their most challenging period since Labour came to power a decade ago.
"Luckily, the credit crunch occurred at a time when the UK economy was robust, but even so the effects on the financial sector are significant, and the mortgage market is not immune from them.
"We now expect a slower mortgage market next year, although by no means a stagnant one," he added. David Marshall, business analyst for the Edinburgh Solicitors Property Centre, said a slowdown in the rise in property prices was also anticipated north of the Border - although prices in Scotland were unlikely to fall.
"Prices in east and central Scotland have been increasing at a rate of between 10 and 15 per cent and we would certainly expect that to slow down to between 3 and 5 per cent - however the market in Scotland is expected to grow.
A spokesman for the Bank of Scotland said: "House prices in Scotland are much lower than house prices in England and Wales. In Scotland the average house price is £141,000, whereas in England and Wales it is just over £200,000.
"UK house price growth will slow down in 2008 but we are not expecting a fall in prices." Jamie McNab, of the Estate Agents Savills, said the squeeze was not affecting the top end of the market, which was still currently enjoying a boom.
"We have just had our busiest autumn ever and we remain bullish about the future. We sell to people of wealth and in Edinburgh itself there are more wealthy people than there were a couple of years ago."
Source: http://news.scotsman.com/uk.cfm?id=1727472007
At the same time house prices will edge forward by just 1 per cent in 2008 and property sales will fall by 15 per cent - as first-time buyers find it more difficult than ever to get on the property ladder. And the latest figures show mortgage approvals have already fallen to their lowest level since 2005, adding to speculation that the crisis at Northern Rock and the credit crunch is hitting the overheated UK property market.
While house prices in Scotland are expected to continue to rise at a rate of 3-5 per cent next year this represents a considerable slow down in a market which has been increasing at a rate of 10-15 per cent in recent years.
And there are fears of the impact on the wider economy, which is currently buoyed up by the property market and funded by consumer credit.
Vince Cable, the Liberal Democrat Treasury spokesman and acting leader, said: "After a decade of often unsustainable borrowing, the slowdown in this housing market shows that the British economy is heading for rockier times."
He accused Prime Minister Gordon Brown of allowing banks to engage in "ever-more reckless lending" to drive growth and added that by not including house prices in inflation figures, Mr Brown had ensured that interest rates remained artificially low.
"The government must act now to curb irresponsible lending practices if the economy is to have a soft landing rather than a crash," he said.
Howard Archer, chief UK and European economist at Global Insight, said there was now a "very real risk" of a price crash. He said: "Evidence is now coming pretty thick and fast that housing market activity is being squeezed by a combination of tightening lending standards resulting from the credit crunch and the increasing affordability pressure on house buyers coming from higher interest rates, elevated house prices and modest real disposable income growth.
"Slowing housing demand is expected to increasingly feed through to significantly dampen house prices over the coming months. Indeed, there is undeniably a very real risk that the housing market could see a sharp correction."
Archie Stoddart, director of Shelter Scotland, a housing and homelessness charity, said: "With thousands of people across Scotland likely to shortly come to the end of the fixed rate period of their mortgages, the reported increase in repossessions is something that is likely to get worse.
"Many people may have overstretched themselves to get a foot on the housing ladder - and as such the slightest change in circumstances can push them over the edge."
CML director general, Michael Coogan, said: "The housing and mortgage markets are facing their most challenging period since Labour came to power a decade ago.
"Luckily, the credit crunch occurred at a time when the UK economy was robust, but even so the effects on the financial sector are significant, and the mortgage market is not immune from them.
"We now expect a slower mortgage market next year, although by no means a stagnant one," he added. David Marshall, business analyst for the Edinburgh Solicitors Property Centre, said a slowdown in the rise in property prices was also anticipated north of the Border - although prices in Scotland were unlikely to fall.
"Prices in east and central Scotland have been increasing at a rate of between 10 and 15 per cent and we would certainly expect that to slow down to between 3 and 5 per cent - however the market in Scotland is expected to grow.
A spokesman for the Bank of Scotland said: "House prices in Scotland are much lower than house prices in England and Wales. In Scotland the average house price is £141,000, whereas in England and Wales it is just over £200,000.
"UK house price growth will slow down in 2008 but we are not expecting a fall in prices." Jamie McNab, of the Estate Agents Savills, said the squeeze was not affecting the top end of the market, which was still currently enjoying a boom.
"We have just had our busiest autumn ever and we remain bullish about the future. We sell to people of wealth and in Edinburgh itself there are more wealthy people than there were a couple of years ago."
Source: http://news.scotsman.com/uk.cfm?id=1727472007
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