To what extent has the credit crunch contributed towards a downturn in Essay

To what extent has the credit crunch contributed towards a downturn in UK house prices - Essay Example ers to ask for hefty deposits, with seven of the ten leading lenders not lending to borrowers who have less than 10 per cent deposit (Gilmore & Blakely 2008). This has led to increased stock of unsold property in the market, which in turn has led to the decline in house prices. According to the figures from Nationwide, the second-largest mortgage lender, the value of an average home fell by 1.8 per cent in April. This is 1.1 percent lower from April last year, amounting to a loss equivalent to  £5 per day (Gilmore & Blakely 2008). Shaftesbury, the British property company that has shops and restaurants in and around London’s Carnaby Street, announced a net loss of  £91.2m for the six months preceding March 31 as against a net earnings of  £212m for the corresponding period a year ago. This is the first announcement of loss by the group since 1992. This year, the company announced a fall in its net asset value by 11 percent (O’Grady 2008). The outlook for the coming quarter remains unexciting with more surveyors expecting a decline in rent. Graham Beale, chief executive of Nationwide Building Society, has predicted that this fall in house prices would continue, with further decline in prices into 2009-10. In the six months to the end of September, Nationwide had advanced mortgages worth  £1bn, considering repayments and redemptions, as against  £3.6bn in the corresponding period last year (Osborne 2008). The society reports an increase in arrears and repossession signalling that the adverse effects of the crisis are beginning to set in with the borrowers facing difficulties in making mortgage repayments. Repossessions doubled year on year, with 300 homes repossessed in the six months to the end of April as against 143 in the corresponding period last year (Osborne 2008). The Market Oracle predicts a 15% fall in the UK house prices over two years to August 2009 (Walayat 2008). It is expected that the UK would follow the footsteps of the US, where the housing