Fri 9 May 2008
Housing market finally crashes, says banks
The UK housing market has finally crashed, say two banks, following the Bank of England's decision to leave interest rates unchanged at 5%.Analysts at Citigroup and Dresdner Kleinwort have compared the UK housing market to the turmoil being faced in the US, largely because buyers are struggling to obtain mortgages.
“A serious housing crash is now under way,” said Citigroup economist Michael Saunders.
Alastair Stewart of Dresdner referred to the fact that the volume of new homes being reserved has fallen significantly – approximately 65% over the past year - pointing out that they are at their lowest level since the early 1990s.
Roger Bootle, economic adviser to accountants Deloitte, believes that the Bank of England will soon have no alternative but to cut interest rates 'dramatically' because there's a danger that property prices could plummet by as much as 20%.
He commented: “'By deciding not to cut interest rates, the MPC risks presiding over the deepest and longest economic downturn since the recession of the early 1990s.
Posted by Marc Da-Silva
in Alastair Stewart, Bank of England, Citigroup, Deloitte, Dresdner Kleinwort, Michael Saunders, News, Roger Bootle on Fri 9 May 2008
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