03 January 2010

Cause and Effect?

From the BBC:
Property is now affordable for first-time buyers in nearly four out of 10 areas of the UK, research indicates.

Someone on average earnings could now afford the average first-time buyer property in 39% of local authority districts, the Halifax bank said.

In 2007, the year in which house prices peaked, homes in only 6% of areas were affordable for average earners.

The improved affordability has come about through a combination of lower interest rates and house price falls.

However many first-time buyers have been unable to take advantage of the situation because of tighter lending criteria imposed by banks and building societies.
Did nobody consider the possibility that the tighter lending criteria and resulting reduction in money available to buy houses might be part of the reason why house prices have fallen?

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