Is the UK property sector on the verge of financial meltdown?
As we see the likes of Land Securities coming to the market for effective rescue funding there is a growing concern that the UK commercial and domestic property markets are on the verge of meltdown. While the domestic market has been declining for well over 12 months now, there are growing concerns that the potential problems in the commercial property market could dwarf those in the domestic market in due course.
As we have covered before, there are rumours that UK banks have exposure of hundreds of billions of pounds to the commercial property market, of which many loans are expected to be reassessed in the short term with the potential for significant write-downs. The demise of the UK economy has seen rental income collapse in many parts of the UK which has impacted upon the commercial property sector and taken away a vital form of debt funding for companies such as Land Securities.
The problem now is that as property companies look to dispose of their assets to raise potentially life saving money they are placing further pressure on the market and pushing prices lower and lower. This self fulfilling prophecy could in effect increase debt in real terms as asset values head south and debts are only reduced by a small amount.
Share this..
Related stories
Will the UK government be recompensed for Icelandic banking collapse compensation?
There are serious signs today that the Icelandic government may not yet be in a position to sign off a £3.4 billion payout in relation to the recent Icelandic banking collapse. Despite the fact that the compensation package has been voted through the Icelandic parliament there is growing resistance amongst Icelandic nationals who feel that they are being made to pay the price for political indif...
Read MoreBuy to let yields continue to fall
In a sign of strength in the UK property market it has been revealed that the average buy to let property now commands a rent of 4.75% as of January 2010 compared to a peak of 5.1% in March 2009. Despite the fact that UK property prices have risen over the last few months, many landlords have found it difficult to push through rent increases and indeed an increase in the number of rental propertie...
Read MoreIs capital gains tax a fair tax?
There is no doubt that capital gains tax will hit the headlines more and more over the next few weeks with rumours of a potential increase from 18% to 50%. However, is capital gains tax a fair tax? In many ways capital gains tax is seen as a tax against the wealthy but over the last 20 or 30 years this vision has changed somewhat. More and more people in the UK, not necessary high earners or we...
Read MoreGerman government bond yields fall
The yield on influential thirty-year German government bonds showed a marked fall this week amid concerns that European base rates will remain relatively low for some time to come. The European Central Bank has confirmed that the economic outlook both within Europe and around the world has turned downwards over the last few weeks with the US economy in particular showing signs of "cooling off"....
Read MoreBuyers still negotiating discounts on property prices
In a revelation which will upset many householders in the UK it has been revealed that house buyers are still negotiating average discounts of 6.2% on advertised property asking prices. The situation appears to be worse in the semi-detached housing market where the average home is going for 6.6% less than the advertised price although a 6.4% reduction in the semi-detached prices and a reduction of...
Read More
