Property expert fears house price 'double dip'

Posted: 24 Feb 2010 11:02:42 GMT

Although it has been officially announced that the UK is out of the recession, one property expert still believes that the British housing market is set to see a "second credit crunch".

Graham Norwood, writing for the Independent, states: "Last year saw a surprise 'boomlet' in the market - but now a second credit crunch that could send property values into a new tailspin is looming."

He says that a number of factors have led him to this conclusion - the first being that according to the British Bankers Association, mortgage lending in January dropped to an eight-and-a-half year low.

Mr Norwood adds that he thinks the majority of home loan demand that was seen towards the latter part of 2009 came from first-time buyers who were hoping to take advantage of the government's stamp duty holiday, suggesting that the housing market had not recovered to the extent that many analysts thought it had.

Furthermore, he explains that the recent rise in house prices has been seen in relatively wealthy areas with the rest of the country not following suit and he expects the post-election climate to further weaken the UK property market.

Timothy Lambert, head of consulting at Ducalian, recently advised that mortgage lending is likely to decline over the coming months as confidence in the housing sector will take some time to recover.

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