September 30, 2013
That fact might have been worth mentioning in a NYT article that discussed a new program by U.K. Prime Minister David Cameron to offer government guarantees on mortgages where homeowners made down payments equal to just 5 percent of the price of the home. The article noted that the average house price in the U.K. is already $274,000.
While it pointed out that a recent rise in house prices brought them back to their pre-crash level it also might have been worth noting that the average price in the U.K. is almost 25 percent higher than the $220,000 average price in the United States. This might provide some cause for concern, since the per capita income in the U.K. is more than 25 percent lower than in the United States. (Until the bubble years, house prices had typically been somewhat lower in the U.K. than in the U.S.)
If house prices in the U.K. fell to the same level as in the United States, new homebuyers would find themselves 20 percent underwater and the government could find that it has added considerably to the national debt that it is trying so hard to reduce.
Note: Typo corrected.
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