Potential crash on the cards for the UK housing market

19 September 2007
According to the Royal Institution of Chartered Surveyors (RICS), there could be a one-in-ten chance of a crash in the housing market over the course of the next year.

Moreover, London prices could be the worst affected, with a 20 per cent chance of a 10 per cent price drop in the next 12 months.

With general turmoil in the UK and global economy, people are becoming more fearful of collapses within the housing sector.

The company’s chief economist, Simon Rubinsohn, told Reuters that talks of a “crash” were not irresponsible scaremongering; however, he added, homeowners were unlikely to see a repeat of the 1990s slump.

Mr Rubinsohn expressed his belief that further interest rate increases – which some experts thought could rise to six per cent – were now unlikely, and that the Bank of England would be able to cut rates if a serious decline appeared imminent.

His forecast for the next 12 to 15 months has been amended, now predicting flat prices rather than the previously anticipated three per cent increase.

This could see a new influx of first-time buyers in the housing market as the long period of interest rate increases had priced many out of the market.

Find out more about mortgage interest rates and first-time buyer mortgages