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Bank of England suggests house prices will drop

25/03/2008

Kate Barker, Bank of England policy maker suggested that following a decline in residential constructions, house prices will drop deeply.

Everyday credit conditions are being reduced; affordability to purchase a new property for many has stopped.

On average lenders are offering 95 percent Loan to Value mortgages; these deals have increased by 6.55 percent.

The Royal Institute of Chartered Surveyors revealed that 2008 has been the lowest rate of mortgage approvals for nine years.

Mr Barker stated that there were too few new homes being generated to meet growth and the current completion rate of 175,000 houses produced are still yet not enough. They suggested an increase in the scale of land being built upon due to current financial conditions.

A vast majority of investors feel that by the end of 2008, houses prices will have increased by 3 per cent, this creating new potential investors and first time buyers to try the market sector once again.

During the 1990’s property prices started to peak to its highest level, buy to let investors in particular feel that house prices on the long-term will increase.


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