House price crash 'a possibility'
Published On 13 April 2007
People may find themselves forced of seek IVAs in the future, unless they plan for a possible slump in house prices, a report warns.Independent market analyst Datamonitor said that it is possible that the UK house market may, in the future, see itself in a similar position to the US market - which is currently in crisis.
According to the research, many expected the housing market to experience a 'soft-landing' at the end of 2005.
Instead, Datamonitor says that 2006 saw rapid house price growth and increased personal borrowing. These factors, coupled with recent interest rate hikes, mean that the bottom could potentially fall out of the market in the near future.
Despite this, Datamonitor believes that a strong economy and high demand could prevent a crash.
"Datamonitor does not believe the housing market is on the road to a house price crash, mainly because the economy remains healthy, but the threat of a boom and bust cycle is still present," explained Karina Purang, Datamonitor's financial services.
"Such buoyant housing activity cannot be sustained in the long-term and, undoubtedly, house prices cannot keep going up forever."
Should such a house price crash occur it could leave many people in financial difficulty. A recent report highlighted the fact that over half (55 per cent) of Britain's personal wealth is now bound up in property.
