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 Investment bank Merrill Lynch has today (June 11th) published a report which warns that the UK housing market is being suffocated by reticent buyers and reluctant lenders.
The study suggests that these pressures may lead to a correction which is more severe than the one experienced during the previous housing crash in the early 1990s.
The report's authors, Mark Hake and Judy Shaw, said: "We are clearly seeing a UK housing market being squeezed on opposing fronts - by a lack both of willing lenders, as well as willing purchasers.
"This was precisely the pattern in the early 1990s, in that once house prices started to fall, consumers felt no need to buy, taking more demand out of the market, which in turn compounded the shortfall of prospective purchasers so leading to further price falls."
Recent research into house prices has unanimously shown significant falls, with Halifax recording a year-on-year drop of 3.8 per cent during May and Nationwide reporting a 4.4 decrease for the same period.
Meanwhile, mortgage approvals slumped to 58,000 during April, down by 49 per cent on the equivalent time last year.
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