An American friend commented to me at the weekend that it is now possible to buy a property in Detroit for $50, not in the smartest parts, of course, but somewhere familiar to those who have seen the film 8 Mile.  This prompted me to have a quick look myself and to ponder whether something similar could happen here.

Having spent two minutes on Google, it is certainly easy to find properties for sale for under $10,000 but I did not see anything quite as cheap as $50, although it would help to be familiar with the geography of Detroit.  For those calling for property to be cheaper here, be careful what you wish for.  Property being too cheap brings problems of its own.

The question we are asking is; could it happen here?  Certainly, the UK seems to have avoided the greatest excesses of sub-prime lending.  In the United States, it seems that some loans were structured in a way almost guaranteed to ensure default, for example, interest rates jumped to ruinously high levels after the introductory sweetener.  In many things, too, we lag behind developments across the Pond and it could be that we shall be spared the worst simply because the party stopped before we had dug ourselves in too deep.

The last property crash was worsened by the fact that many poorer families had bought their own homes under Right to Buy and it was questionable whether many of these people, who were subsequently repossessed, should have been buying in the first place.  The benefit system is much kinder in the UK to those who fall upon hard times whilst renting and there are people who need this kind of protection.  Only time will tell whether we manage to avoid a significant enough rise in repossessions to avoid a large fall in prices but policy makers would do well to note that borrowing to buy a property is not the right solution for everyone.