Author Topic: Why house prices have further to fall  (Read 3046 times)

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The Prophet

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Why house prices have further to fall
« on: January 19, 2012, 11:19:23 am »
From 1975 to 1982 house prices rose by 153% whilst general prices rose 193%.
However between 1983 and 2010, house prices had risen by 440% with general prices rising just 178%.

The paper gains created by the house price bubble could be cashed in and used to buy consumer goods.
So the finance industry provided the cheap home loans which in turn to increased house prices.
This created consumer spending, increasing profits and salaries thus allowing people to take out even bigger home loans.

Now reality has set in.
The Land Registry House Price Statistics to November 2011 show that prices fell 1.9% over the 12-month period.
The UK average house price is now £160,780.  Home loans are down from 120,000 a month in the boom to around 50,000 a month now.