This is what happens when you elect socialists. Britain is about to have their housing market collapse on them. Experts warn it could be as bad or worse than the housing crash in the early 1990s. Indicators are now showing that the price of homes could plunge as much as 40 percent. This could herald the return of negative equity… this happens when the value of a home falls so much, it is worth less than the mortgage held on it. In the early 1990s, over 1 million Brits went through this.
Professor Paul Cheshire, a former Government housing adviser, said: “We are due a significant correction in house prices. I think we are beginning to see signs that correction may be starting. Historically, trends seem always to start in London and then move out across the rest of the country. In the capital, you are already seeing house prices rising less rapidly than in other parts of Britain.” This is going to have a disastrous effect on not only Britain’s economy, but their stock market if it occurs.
If the home values plummet like this, it will imperil thousands of recent home buyers. Back in 1989 when this happened, the housing market deflated over six years and values dropped by 37 percent. The National Association of Estate Agents just reported that the number of homes sold in May below asking price rose by a whopping 77 percent. The good professor says the instigator of all this is a fall in real incomes. That’s when wages fail to keep up with inflation. Inflation just hit 2.9 percent last month, while incomes only grew by 2.1 percent.
Real estate agents and experts in the field are also saying that the wealthier side of the housing market has been seriously hit by stamp duty hikes. Of course, they are blaming all of this on Brexit… I suggest they look towards the EU on all this and the fact that all countries on this planet are now pretty much bankrupt. The Council of Mortgage Lenders stated earlier this month that the housing market has officially stalled.
America should keep a watchful eye on Britain’s housing market
What is happening there is almost assuredly coming here. Inflation is being deliberately hidden in our marketplace. The size of products keeps shrinking and prices keep increasing. It’s all connected. Right now, housing prices are rising twice as fast as wages here in the US. Experts here are calling this a housing recovery. I highly doubt that given the state of our economy and how over valued the stock market is. Right now, most people cannot afford to buy a home unless they have near perfect credit.
Real-estate analysts see a trend in the market today that is similar to the one we went through back in 2007 when the housing bubble burst and then the entire economy plummeted. The most common similarity is the volatility faced by the real-estate market today, with 2016 marking yet another year during which housing prices appreciated beyond expectations and mortgage rates floored, crossing the 4-percent mark for the first time in two years. This is worsening as affordability for an individual earning median pay worsens.
The market is headed up here. But without a rise in wages and a strong economy, the housing market will at some point crater and we will be in the same boat as Britain. The UK is in for a devastating loss if their housing market plummets by 40 percent and I am not sure their economy can withstand it.