Governor says UK property market not facing crash

Posted: 28 Mar 2007 11:47:15 GMT

Bank of England governor Mervyn King has said Britain will not follow the United States in suffering a property market crash.

Bank of England governor Mervyn King has said Britain will not follow the United States in suffering a property market crash.

Fears have been expressed that the recent collapse of America's sub-prime lending market, which led to a major stock market fall, would have a follow-on effect in Britain.

But the governor said Britain's situation was different.

He told the House of Commons treasury select committee yesterday: "If house prices were to fall by a relatively modest amount, then I don't think the consequences would be very severe because there would only be a relatively small number of households in negative equity."

Other economists have also said a crash is unlikely.

Jonathan Said from the Centre for Economics and Business Research told the BBC a crash was "very much off the cards", given the current economic fundamentals.

He said that demographic trends such as a move towards smaller households and the insufficient number of houses being built meant that supply was still not meeting demand, which was continuing to push property values up.



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