Who is trying to pull the wool over our eyes?
The front page in today’s Observer:
‘Housing boom over’ as UK bank chaos grows
Britain’s house price growth will be halved next year as the global financial crisis exacerbates the impact of rising mortgage rates, according to Nationwide, the biggest mortgage lender.Panic in the UK (£1 billion in savings were withdrawn by customers from the Northern Rock on Friday due to concerns that the bank might go under) and a global financial crisis in the mortgage sector will result a rate of price growth for property of 3% per year after prices have already doubled in the last ten years?After the dramatic bail-out of high street bank Northern Rock underlined the impact of the American ‘sub-prime’ mortgage crisis on Britain’s financial sector, Fionnuala Earley, Nationwide’s group economist, said she expected house price inflation to slow to around 3 per cent next year.
Prices in Germany fell by over 3% in the last year without any concerns about sub-prime lending. This week’s Economist has an article about global property price changes.
I think property prices in the UK are going to drop substantially in the next 12 months, not rise by 3%. The Economist, by the way, thinks that prices in the USA have risen less steeply than in the UK - which makes this video even more thought provoking (scroll down after watching the video for more information about the prices):
Update: (2007-09-17): Interesting to read today, that Alan Greenspan, who has been advising Gordon Brown since he retired, is warning of difficulties ahead for Britisch homeowners in today’s Telegraph.