UK property market heading for a downturn

Permalink: UK property market heading for a downturn
by Kay Murchie

According to Alan Greenspan, the former US Federal Reserve Chairman, Britain’s housing market is heading for a fall and he has warned of problems for homeowners as increasing interest rates bring house price growth to a standstill.

Mr Greenspan commented that the UK market is at risk from the turbulence in the financial markets. Mr Greenspan who advises Prime Minister Gordon Brown and President George Bush remarked that there will be difficulties. Mortgage rates are shifting and the majority of the 2-year fixed rates are coming to an end.

Mr Greenspan also cautioned that inflation could soon increase significantly and interest rates may have to go to double digits to keep prices down. Mr Greenspan’s announcement comes after recent indications that the property market is sluggish after 10 years of consecutive growth.

However, Mr Greenspan believes the UK economy will handle the problems despite his dismal forecast. He added that the UK hasn’t had a hint of a recession for a long time and a good portion of that is the flexibility that arose from the crush between Arthur Scargill and Margaret Thatcher.

According to Mr Greenspan, that was the crucial moment and Tony Blair and Gordon Brown did not attempt to reverse it. They acknowledged that there was something essentially good for British labour in having a flexible economy.

Mr Greenspan applauded Gordon Brown for turning Britain into “the most open economy in the world” while saying President George Bush is wasteful with public money.