Today, Britain’s second largest property company British Land posted a pre-tax loss of £35 million in the six months to September, down from a profit of £670 million in the same period last year. Meanwhile Bank of England boss, Mervyn King has said that property prices are falling and [tag]mortgage rates[/tag] are rising. We have a situation building where households are coming off fixed rate mortgages after 2-3 years and finding mortgage payments rising at rates that could trigger increases in arrears and defaults. Does this mean that we are in for a rough time over the next 12 months?
The problems experienced in the US with sub-prime mortgages and it’s resultant knock on effects have started to surface in the UK. Today Barclays Bank announced that it’s investment arm, Barclays Capital, had written off 1.3 billion pounds due to the sub-prime issue.
So are we heading for a sharp market correction in terms of the UK housing market? or a gradual slowdown. What will it mean for those already on the ladder. What about those who are not. Who will be most affected? Will it be investors with second or third homes or professional landlords whose portfolios may be large?
There are those who believe the UK housing market downturn will be triggered by [tag]buy-to-let[/tag] investors cashing in on recent changes in Capital Gains Tax due to come into force in April 2008.