Take a typical British house today costing £160,000. To buy you need a deposit of 25% or £40,000. Banks know that property prices could crash as they have in the USA, by 40% from their peak prices. In the UK prices are only down by about 10% so far. If prices fell further, banks who repossess would still face a potential loss even after taking a 25% deposit. Repossessed houses sell for far lower prices at auction.
The crash is coming anyway. Why not get on with it? All these stress tests and bail-outs are only delaying tactics. I own a few houses, but I don’t care. Less inheritance taxes to pay.
Reports show that banks have less money ………
Open Europe –
….and that consumers are less willing to borrow.
WSJ – Latest news on coming decline –