They used to say 'it's grim up North' when referring to the north of England. Now, however it appears to be grim across the entire United Kingdom. For the nation is in the grip of a credit crisis and Britain's love affair with property has taken the biggest hit of all. With house prices expected to fall 15 per cent or more by the end of 2009, a whopping one million owners could be pushed into negative equity.
That's a stark contrast to the UAE's property market, something I found hard to miss during a recent trip back to my homeland. While the Gulf appears flush with cash, the UK is, most certainly, not.
Before I moved to the Middle East in 2005, 'property' was the UK's buzzword. The pressure to get onto the ladder was immense and once you were on it, there was even more pressure to move up it. Homeowners put everything they had into their cherished piece of real estate, often leading fairly basic lives all for the love of their property.
Getting the credit to buy was never an issue either. There were 100 per cent mortgages, even 110 per cent. But then the sub-prime crisis hit the United States and it wasn't long before the UK – whose mortgage lenders claimed they'd treaded far more carefully than their US counterparts – was in trouble.
The worst affected are those who bought with 100 per cent mortgages in the last year. They are now almost certainly in negative equity and the situation can only get worse.
The nation's media is packed with grim news of properties that won't sell and many more that are repossessed. The personal finance pages are dedicated to managing your mortgage; women's magazines offer cost-saving tips for running the home; and TV programmes such as the popular
Location Location – that helps viewers find their dream home – are being replaced with shows urging the nation to fall in love with their existing property all over again.
Sadly, every friend I met during my visit had a different tale of woe. One was struggling to sell a home; another, working as an estate agent, was fearing redundancy. Others complained of soaring food, fuel and energy bills. Simply trying to live is a struggle and economists say families are facing the biggest financial squeeze since the 1970s.
With mortgage lenders tightening the leash on who they will lend to – what was once a country flooded with credit, now seems to be suffering a severe financial drought. Add in the recent Bradford & Bingley debacle and the picture becomes even gloomier
But for light relief I simply had to hop on a plane and head back to the UAE. For no matter how bleak the property scene in the UK is – the market here – a bit like its climate – is still exceptionally bright and sunny. How long it will last is another story.
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