UK House prices fell in August, which is for the first fall in prices since 2005. The Royal Institution of Chartered Surveyors (RICS) stated that this was the first fall since October 2005, which coincided with a temporary lull in the UK interest rates raising cycle during 2005. Since which time UK interest rates have increased by a further 1.25%, and mortgage interest rates much further.

The RICS's report now confirms the Market Oracle forecast of 22nd August 07 - UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth . which signaled that the housing market had peaked as of August 07, and that despite UK interest rates being at a near term peak, mortgage interest rates were expected to explode higher due to the US Subprime sparked credit crunch. This was illustrated earlier this week with two of britain's biggest mortgage banks raising their interest rates Rise in Mortgage Interest Rates To Impact UK House Prices (12th Sept 07)

The outlook for UK house prices continues to be for a two year bear market that will take average house prices lower by at least 15% from their June / July peaks, with greater regional variations.

The Banking sector continues to tighten lending criteria as UK Banks Short on Cash Entice Savers With High Interest Rates (9th Sept 07), this is expected to continue well into 2008.

By Nadeem Walayat
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The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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