Property industry awaits FTSE impact

Posted: 13 Aug 2007 10:56:08 GMT

Experts are trying to ascertain the likely impact of global stock market jitters on the British property market after the FTSE100 slumped last week.

Experts are trying to ascertain the likely impact of global stock market jitters on the British property market after the FTSE100 slumped last week.

The index of the top 100 firms in the UK fell by 3.7 per cent on Friday, as fears over the sub-prime lending market in the US spread to Europe, causing concern across the continent.

There are now fears that lenders will move to limit their exposure to risk, potentially making it harder to take out bad credit mortgages and undermining the property market.

However, Nationwide economist Fionnuala Earley is among those who have said the full impact of the FTSE fall cannot yet be predicted.

For the British market Ms Earley acknowledged wholesale funding costs might increase, but said it was by no means certain what the full impact might be.

"If the Bank of England see these current developments as a real threat to the City," she noted, "this is likely to reduce the risk of further increases in interest rates, counteracting some of that effect."

Encouraging news emerged from the City this morning, with the FTSE100 climbing more than 100 points in the first two hours of trading.


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