For homeowners the ten years leading up to the third quarter of 2007 were very fruitful in terms if finances, the main reason being that house prices rocketed, and those that were lucky enough to own a property saw the value of their home soar and the equity in their properties shoot sky-high.

The news was not so good for those that did not own a home, as year by year the prospect of homeowners slipped further and further away because of the level at which house prices were rocketing.

However, in October of 2007 house prices peaked, and since then they have been steadily falling month on month. For many homeowners who had expected property values to continue rising the bubble finally burst, and for the unlucky ones that purchased their homes in the few years running up to autumn 2007 the prospect of falling into negative equity started to become a reality.

The news could get even worse for the nation’s homeowners, as in a recent report one leading city forecaster suggested that the trouble wasn’t over yet, and that house prices could slump by 55 percent. In addition to this he also suggested that not only would the recession be a long lasting one but that the prospect of Britain actually going bankrupt could not be ruled out. The report, which was leaked, indicated that the housing crisis and house price collapse was far from over.

House prices in the UK are said to have fallen already by over 20 percent, but if the over-correction in house prices is the same as that seen in the 1990s, when house prices last plummeted, the report claims that house prices could actually end up falling by up to 55 percent in all, which could be devastating for many homeowners, especially those that have bought their houses recently and could therefore end up owing more on the property than the property is actually worth.

The Chancellor of the Exchequer said recently that the problems in the housing and economic sectors could not be resolved overnight.

He added: ‘It is crucial to remember that we are dealing with a constantly evolving problem – making life difficult for every country. Since November we have witnessed a collapse in world trade not seen in generations and a much deeper and more widespread global recession, with every country affected.’

He also said: ‘When it comes to economic forecasts, even the International Monetary Fund finds it difficult to hit this moving target.’

The leaked report also went on to state: ‘The bankruptcy of the UK is a very real probability as the UK government is trying to stimulate a greater debt burden in a grossly over-indebted economy. We believe the scale of the imbalances in the UK means there is no prospect of a recovery in 2009 and we expect the UK to be mired in a deep recession through all of 2010.’

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