The looming threat of Brexit has dragged down the UK property market further, with prices falling at their fastest rate in six years according to the Royal Institute of Chartered Surveyors (RICS). And the outlook does not look exactly rosy.
One interesting way of assessing the future is to look to the past, comparing previous housing crashes — the UK recession of the early 1990s, the Japanese asset price bubble, the Asian financial crisis and the global financial crisis of 2008 — with circumstances today.
The Bank of England’s worst-case scenario for the UK housing market post-Brexit is a downturn roughly on the scale of that in the south east in the early 1990s. House prices in the UK’s south-east fell nearly 36% ; in real terms, they fell 47%.
Nationally, repossessions peaked at 75,000 in 1991. By 1993 some 1.6m people were estimated to be in negative equity. But experts believe a repeat of such measures is unlikely. We are not going to see people posting their keys back to the banks. Policymakers have got better at dealing with these things in the main.