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Why? Because homes are essential items, and many are sold voluntarily, meaning those that have to buy will do everything they can to do so. Those that don’t have to sell up simply won’t bother. This will reduce supply and help to insulate prices from a drop for a little longer.
But here’s why house price crashes are so devastating to the wider economy.
As lending rules toughen, businesses that rely on loans will see them become more expensive or withdrawn altogether. As customers begin to feel the pinch, unnecessary spending will stop. In scenes reminiscent of previous crashes, we’ll see restaurants and cafes hit hard.
Thanks to slowing home sales, associated trades like carpet showrooms and kitchen companies will close. Our high streets, just recovering from lockdowns, will once again be filled with boarded-up and whitewashed windows.
Unemployment will begin to climb as employees in these businesses find themselves without work. With no job, any hope of buying a property is gone.
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