Okay, cards on the table, what is the Property Crumble UK house price forecast for 2011?
In the first three months of the year they will show a small gain in January, then drops in February and March followed by positive numbers in April and the spring. The lack of stock in January and developers masking special deals (we’ll buy your old home at an inflated price and add a £20k kitchen) will give the impression of property prices holding up. The lack of any increase in interest rates in the first half of 2010 will stop the bottom falling out of the market. However, whilst it is clear to all commentators that by any long term measure UK property remains over valued, equally, no one really benefits from a rapid adjustment to realistic prices. So, for the UK banks, whose main form of loan collatoral are homes, property prices which are not falling sharply allow them to restructure their balance sheets. If property prices were to fall sharply, then UK bank’s balance sheets would be in trouble and that would then cause the UK to become another Ireland. Remember that Ireland’s b
