UK housing market in decline

Many fear UK housing collapse to be severe. Investors believe it may be a time to wait out the storm.

There are many fears in place for the UK housing market. Among them is the fact that the entire market is near collapse. Some believe the country is facing the results of poor mortgage lending practices, constant oversupply of new properties, as well a widespread fraud that will drive the market to full collapse.

According to JP Morgan who issued a warning this weekend, a 6% decline in house prices is likely to be seen in the UK this year. An indication of the future demand of the property market is the number of new mortgages that have been approved. That number has fallen for the last seven months. December's number of 73,000 was the lowest number seen in the last 12 years.

According to Malcolm Barr who is JP Morgan's Chief UK Economist, "The rapid slowing in prices, the step up in new supply, and the marked drop in household expectations for house prices suggests the credit crisis has encouraged existing homeowners who were considering a sale to move quickly, and accept a lower price, to realise existing capital gains before they are eroded." This was reported by The Guardian.

Lenders are tightening their belts as they announced this week that they are no longer willing to take on 125% or even 100% mortgage loans.

For potential UK property investors, this trend is likely to cause a hold back in investing here. Until a cool down, many believe investors will look elsewhere and wait out the storm.

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