UK Housing Market Repeating US Tumble?
There is a real danger that the housing market crisis in the US could be repeated in Britain, analysts said on Tuesday.
The latest data pointed to falling house prices, combined with a lower availability for mortgages and increased difficulties to refinance, which are the root of the problem.
Halifax, Britain's largest lender, said house prices fell in March at their fastest price since the recession of the early 1990s.
House prices fell by 2.5 percent last month, six times as much as analysts' forecast, while the annual three-month rate of house price inflation was 1.1 percent, compare with the double-digits it was recording only six months ago.
Equally worrying, analysts said, was the fact that mortgage availability has been drying up.
"If you can't get a mortgage, you're less likely to buy a house," Anthony Gibbs, senior gilts broker at Vantage Capital Markets told CNBC.com. "Those who entered the property ladder late could fall off again."
"The pattern is very similar to what happened in the U.S.A," Gibbs said, adding that the UK was still "a long way away" from a similar situation.
But the risks are gathering, as the consumer debt ratio is higher in the UK than it was in the U.S. before the crisis started and the UK economy relies much more on the housing market and on the consumer than the U.S., he warned.
Commercial property isn't doing much better. Office take-up in the past six months is down 40 percent in London and down 60 percent in London's Docklands area, according to the latest data from Jones Lang LaSalle.
"There has certainly been a dramatic cooling from a place where people thought that values were really unsustainably high," Matthew Hill, CIO of MSS Real Estate, told "Squawk Box Europe".
But some investors who had backed out of the market, expecting a correction, are now coming back,Hill said.
Still, more disappointing data will only exacerbate the problems in British housing.
"It becomes self-fulfilling," Gibbs said. "Confidence is a very important aspect in an economy."