Why house prices defied gloomy forecasts
The housing market remained stable throughout 2009, despite gloomy predictions of a collapse in house prices, and can be explained by the underlying differences from the property slump of the early nineties, according to a North Staffordshire estate agency.
Heywoods Property, based in Newcastle-under-Lyme, said the reasons for the recent downturn were entirely different from the circumstances of the early 1990s when interest rates were at a budget-crunching 15% and unemployment was hovering at around 3 million.
It said that at the time of the previous economic downturn of the late eighties and early nineties, high interest rates were the straw that broke the camel's back and led to a wave of forced selling as homeowners struggled to make ends meet.
However, it added, the trigger for this latest downturn was the sudden unavailability of credit, which meant that banks and building societies stopped lending almost overnight, throwing a spanner into the works of an active housing market and bringing it to an almost immediate halt.
Heywoods said that this time interest rates were at all-time low, which still made housing affordable, provided homebuyers could get access to mortgage finance.
The estate agency added that, although the property market throughout North Staffordshire remained relatively subdued, there was nevertheless cause for optimism as credit restrictions continued to ease.