UK housing repossessions 'to peak in two years'

Published by Jon Land for 24dash.com in Housing

A leading economist predicts it will be another two years at least before repossessions reach their peak, and the outlook for the UK’s economy remains ‘hideous’ for the next decade.

Speaking at the Chartered Institute of Housing’s Annual Conference, UK and USA economic expert, Ian Shepherdson, predicts that repossessions will reach between 100,000 and 120,000 per year by 2011, as the levels of unemployment increase and incomes become squeezed. Repossession levels in 2008 stood at 40,000.

It was a double-whammy of bad news for families as Mr Shepherdson highlighted the collapse of bank lending to the ailing construction industry.

Investment by banks has dropped to virtually zero from annual levels of around £6 billion per year. All of this is contributing to a huge decline in house building with some estimates indicating more than a fifty per cent drop in the number of new homes being built this year compared to 2008.

Mr Shepherdson’s gloomy outlook for the economy was also echoed by Nationwide Building Society’s chief economist, Martin Gahbauer, who indicated that the current drop in house prices only made property more affordable if interest rates stayed low and people had a deposit.