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Housing Market May Be on Brink of Recession

LONDON-One of the country's largest mortgage lenders says that the housing market is booming at an 'unsustainable' rate, sparking fears that a plunge into recession could be just round the corner.

By Steve Killick | Updated on August 01, 2001

The Nationwide says its house prices rose by 1.1% in June, and 10.9% on the year, with the average property increasing in value by £165 a week. But it says the current rate of house price inflation was ‘unsustainable’, and while there are no signs that the market is about to slow down, prices will have to fall at some stage.

Alex Bannister, Nationwide’s chief economist, says house prices are being driven by the unexpectedly sharp rises in London and the Southeast, which were filtering out into East Anglia and the Southwest. ‘Despite the news of a global slowdown, few people believe it will affect them,’ he says.

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