2 percent fall in house prices increase recession worries on 100 Mortgages

House prices in the UK have seen their sharpest annual fall for at least two decades, in June the value of a house fell by at least 2 percent, this downturn in the property market is now spreading fears that the economy could plunge into a recession.

House prices for the overall year are now down by 8.7 percent than the year before, this current decline is much larger than in 1992. Since the peak last year, at least £20,000 has been wiped of the value of the average home.

The Bank of England will be studying these figures at their monthly meeting today, as they have to decide what to do with interest rates, but the smart money will be on them keeping things the same this month.

Over the last decade homeowners have seen their houses almost treble in value, but now as the credit crunch kicks in they are slowly seeing that profit disappear.

As the credit crunch starts to take a firm grip on the UK, mortgage lenders are less willing to part with their cash so are making the criteria harder for people to get a mortgage. The housing market has all but dried up, mortgage approvals are down by almost half, as a result more analysts’ fear that we are heading towards a recession.

Source - Reuters

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