The UK Housing Crisis Did Not Start with the Credit Crunch

I googled “housing crisis uk ladder” without the quotes just to see if I would find this blog on the first page of google results.

Somewhere down the bottom on the first page of google results I did found the blog. However, a website that which ranked higher caught my attention with it’s sumary: “How are the young ever to afford to get on the housing ladder given the severe … Wanted: new city to solve UK housing crisis, Household growth in England. …”

I clicked on the website. It was promoting a book titled “The Housing crisis” published in 2004.

I jumped to the key facts and highlighted the following:

“Britain will need a new city the size of Leeds to be built over the next decade if it is to tackle the chronic housing shortage which leads to rocketing house prices that keep potential first-time buyers off the property ladder. (p. 20) “

Bearing in mind that this book was published in 2004 way before the credit crunch started (2007), we can draw four keypoints about the UK housing crisis:

1. The fundamental UK housing crisis is mainly due to the housing shortage
2. Many would-be first time buyers won’t jump on the property ladder if no creative solution is brought to the market
3. “Rent to buy”, “rent to own”, “rent now buy later” or lease options are best suited solutions to allow most first time buyers with regular income to reach the first rung of the the property ladder.
4. Any one who can’t qualify for a mortgage immediately but have regular income will also benefit from these creative solutions to (larger) home ownership.

If you can’t qualify for a mortgage right now but would like to buy a property eventually, visit our tenant-buyer section.

If you have a house that you preffer to sell at market value or above because of your personal circumstances, visit our landlord-seller section.

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Will The Property Market Improve By End 2008?

Below, I’ve listed property market headlines from June 27 until July 2008. The next time I publish another headline list will be around the end of the year. I don’t set any expectation. I just want to see if the market improves or not. Unfortunately one of the article quotes: “SLUMP COULD GET WORSE - Hit by the global credit crunch, lenders have toughened up borrowing conditions, demanding as much as 25 percent of a home’s value as a deposit before making any new loans — until relatively recently 100 percent loans were commonplace“. Read the rest of the headlines and follow the links for more information.

But the point is this:

• If you cannot put 25% down as deposit then rent now buy later, consider becoming a tenant buyer.
• If you cannot accept 25% price reduction off the value of your house then let now sell later, consider becoming a landlord seller.

UK Property market - housing crisis headlines

July 10 - Builders feel pain as house prices fall
July 9 - Housebuilders have cut nearly 4,000 jobs in the past 10 days, with some shedding 40 percent of workers to cope with the deepening crisis in the housing market. Bovis cuts 400 jobs and Redrow cuts 350 jobs. Bovis CEO says the downturn has gathered pace in the past few weeks and feels “an awful lot worse” than the last major correction in the early 1990s.

July 8 - Persimmon cuts 1,100 jobs.

July 4 - Barratt Developments cuts 1,000 jobs.

July 2 - Taylor Wimpey says it fails to raise up to 500 million pounds in new cash.

June 30 - Taylor Wimpey says it will write down the value of its land holdings by 660 million pounds and axe about 1,000 jobs.

May to June - Housebuilder shares fall almost daily as investors flee the sector.

April 30 - Nationwide Building Society says its April house prices index was down 1.0 percent year-on-year, the first annual fall since March 1996. Days later, Halifax says April house prices, as measured by it, were down 0.9 percent year-on-year for the first annual fall since February 1996.

April 24 - Persimmon, Britain’s biggest housebuilder by market value and No.3 by homes built, says the housing market has deteriorated rapidly since Easter.

April 8 - Halifax says house prices fell 2.5 percent in March.

March 6 - Taylor Wimpey, Britain’s biggest housebuilder by volume, says its order book is down 19 percent year-on-year and suspends a 500 million pound share buyback.

February 17 - Northern Rock is nationalised.

November 8 2007 - Halifax, Britain’s biggest mortgage lender, says house prices fell for the second month in a row in October, the first back-to-back monthly falls in two years.

November 6 - Bovis Homes says global financial turmoil is hitting the housing market, effectively telling analysts to trim their profit forecasts. Other housebuilders tell a similar story in later weeks.

September - A run on savings at Northern Rock results in the government agreeing to guarantee all existing deposits.

August - “Credit crunch” starts appearing in headlines.

June 27 - Mortgage bank Northern Rock cuts its 2007 profit forecast, blaming a rise in funding costs in financial markets.

How can this title on Yahoo news: “Branson predicts “spectacular” airline casualties” not shock you?

The reference article can be found at: http://uk.news.yahoo.com/rtrs/20080712/tuk-uk-britain-branson-fa6b408.html

The man in charge of Britain’s No. 2 long-haul airline, Virgin Atlantic complained in The Times newspaper: “The financial state of the world is just about the worst I’ve ever known it,” and he added “It’s getting perilously close to being worse than the 1990s.”

He also added: “You have the perfect storm — you’ve not only got the banking crisis and the housing crisis, you’ve got the soaring fuel prices as well…” 

Here at UKPropertyLadder.com our main interest is the housing crisis. If Sir Richard Branson himself considers that the housing crisis is getting perilously close to being worse than the 1990s then UK house prices are set to continue to fall. At the same time recession conditions of the 1990s means affordability to housing will also drop due to higher unemployment and tighter or tightening bank lending criteria.

If you desperately need to sell your house at market price or above, this is the worse time ever to sell. But there is always a solution at hand for those who are ready to walk the extra mile. Visit our landlord-sellers page and learn how you can sell your house at market value or above.

If you think now is the time to buy your dreamed home because prices have never been so low yet you can’t seem to qualify for a mortgage visit our tenant-buyers page. You’ll learn how you can afford your dream house without the banks saying no to you.