Credit crunch not expected to tank Real Estate market

Posted 2007-11-16

The Ernst & Young Item Club foresees a slowdown in national economic growth, but dispels the suggestion that home prices could be set to crash in the wake of the economic credit crunch.

The UK’s economy may slow, but there is little chance of the credit crisis having a terribly adverse effect, it has been claimed.

As such, although home loans may become somewhat more difficult to obtain, they may still be an effective way of gaining extra funds previously locked up in property.

“The threat of a major credit crunch seems to be receding” and “As interest rates come down and new supply remains restricted, the foundations will be laid for renewed real price growth,” offered Professor Peter Spencer, a chief economic adviser.

House prices are also forecasted to recover and gain in the not too distant future, which may increase the amount and frequency of obtainable home loans.

Professor Spencer’s comments revise the previous prediction by Ernst & Young that the credit crunch could “knock the stuffing” out of the housing market during the Christmas season.

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