The case for a slowdown in the economy grows
There have been increasingly strong signs that the property market is heading towards a slowdown. The first shock to hit the housing market last summer was the sub-prime lending crisis that resulted in banks tightening up lending criteria and following stricter conditions on extending bad credit loans to borrowers with poor credit history. The slowdown was compounded by the crisis to hit Northern Rock in recent weeks. All this has led to a change in the way the property market is working.
The fact that there has not been a flood of sellers looking to sell their house in order to avoid financial difficulties in the coming months is a clear sign that most property owners at the moment have decided to take a ‘wait and see’ approach to the property market while uncertainty remains over what direction it will go.
There are currently signs of a slow down but not the kind of signs that would indicate that we are heading towards a crash. One business consultancy, Hometrack, which monitors house prices and issues a price index each month for England and Wales has found that while there are clear signs of a slowdown they are not catastrophic. Other firms have found similar result with their studies of the housing market such as Rightmove.
Over all house prices have shown little movement over the past month as buyers became more and more cautious and also as a result of banks tightening up of lending criteria on loans and mortgages.