Cable warns house prices could halve
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House prices could fall by 50 per cent from their peak, Liberal Democrat treasury spokesman Vince Cable has warned.
At a conference of London housing professionals on Friday (7 November) Mr Cable said the UK was dealing with ‘the bursting of the third major bubble in house prices since the Second World War’.
‘The bubble is now bursting and none of us can predict how far it will go,’ he told delegates. ‘But the work I saw last week, based on auctions and the rather elementary futures market in housing, suggests that we could be in for something really quite drastic, like a halving of prices from the peak.’
This scenario was ‘maybe at the extreme end of the projections’, he added.
Speaking on the same platform, Labour MP Karen Buck, who campaigns on housing issues, said housing associations had ‘uncritically’ bought into a culture which exhorted people to own their own homes, ‘even when that was not financially realistic’.
‘We have got to fundamentally rethink what our attitudes are towards promoting home ownership for people at the very margins of being able to afford it,’ she said.
‘That’s obviously formed the whole concept of sub-prime, which is what drove the crisis.
‘And I have to say – controversially – that a lot of [registered social landlords] bought into that concept as well, and bought into it too uncritically.’
Ms Buck, the MP for Regent’s Park and Kensington North, said she was now seeing the problems of overcrowding in London spill over from social housing into the homeownership sector.
‘One of the worst scenarios is meeting people who bought their studio flat through shared ownership, married and had two children or three children, and are now utterly trapped,’ she continued.
‘They were in a difficult position before, if they couldn’t staircase, and now their position is catastrophic. They don’t have the equity to be able to move, and they don’t even have the hope – rather tenuous – of social housing being able to meet their needs.’
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Readers' comments (3)
russell duke | 11/11/2008 10:18 am
when will politians from all parties except the land/housing market controls every aspect of capitilism and have the courage to explain this to the general public and so scrap tax s on the working wage and savings and tax the value on land? this will lead us to the farer society man kind has sort to live in for so long.
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Adrian Robertshaw | 11/11/2008 12:48 pm
I would go even further and only tax consumption not income. I think i am the best judge of how to spend my income, not HM Gov ! However I have said for years and in spite of benefiting from a houing boom in my career, the home ownership system in the UK is simply not sustainable. However to change it would require such a cultural shock the change is unlikely to happen this side of a fundamental re-order of our society from top to bottom. This is not an anti-capitalist proposal, far from it. Rental works in other countries in part because the tenant and landlord has to comply with strict rules and also people in many European countries tend to respect other peoples posessions and property rather more than in this country. We also have much higher levels of job mobility etyc etc. So far i have yet to hear one single proposal from any politician for a new housing model for the UK.
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Suziclue | 12/11/2008 7:29 am
Just like everything else the UK will follow the US. UK follows US into Iraq..UK follows US as housing prices skyrocket during the late 90s through 2005. So now the US Market crashes so will the UK. A majority of cities in the US have already halved the prices of their home and more cities are to follow. Detailed stats on which cities encountered the highest drop can be found at:
http://www.homepricetrend.com
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