House price fall in 2011 impact on social housing

Yesterday the Office of Budget Responsibility (OBR) predicted a 3.1% fall in house prices during 2011. See table 3.6 here (large pdf).

While lower house prices are a good thing this will have an impact on social housing development. The major developing Housing Associations (HAs) are up to their necks in debt already: falling house prices reduce their ability to borrow to fund more development.

Additionally an expectation of falling house prices reduces the inclination of shared ownership tenants to buy out additional shares in their home (why buy now when it’ll be cheaper later). This reduces a major income stream for many HAs.

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