BRITAIN is seeing its worst property crisis since the '80s.

UK PROPERTY CRISIS

Demand and home prices plunge

BRITAIN is seeing its worst property crisis since the '80s.

10 August 2008

BRITAIN is seeing its worst property crisis since the '80s.

Home prices plunged by more than 10 per cent last month, the biggest fall since 1983.

And business groups and analysts say huge cuts are needed in the cost of borrowing to pull the country out of its first recession in more than 15 years, reported The Guardian.

Official figures, released on Thursday, say that demand for houses has fallen 33 per cent compared to a year ago.

Similarly, the demand for commercial buildings is down by almost 40 per cent over the same period.

And it's the country's main banks who are seeing the first sign of trouble.

The Royal Bank of Scotland is expected to unveil losses of £1.2 billion ($3.2b) - the biggest in British banking history.

On Thursday, Barclays also announced that its profits are down by a third.

Its chief executive Mr John Varley said: 'It would be wrong to suggest that the market conditions over the foreseeable future will be anything other than tough.'

Currently, inflation is now hovering at 2 per cent and expected to rise to 5 per cent in the coming months, along with more expensive energy prices.

Mr Suren Thiru, an economist at commercial bank Halifax, said: 'Pressure on householders' income, together with a very significant reduction in mortgage finance due to the global financial crisis, is constraining potential house buyers' ability to enter the market.

'This is resulting in both lower prices and activity levels.'

Figures show that home repossessions have jumped by more than 40 per cent in the first half of this year, the highest level in 12 years.

Analysts are now urging banks to lower their interest rates.

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