2008 Financial Crisis--- Impact on UK House Prices

Financial Crisis impacted significantly on UK's house prices. In recent years, the house price has rosen skyrocketly and reached an unprecedented level till 2008. With a continous trend of unbrokensies in property values since the deregulation, the mortgage markets became profitable and attractive to banks around the world. Lenders were offering loans that actually more than six or seven times of borrowers real incomes and also more than the face value of their underlying properties, which forshadowed the excessive risk along the property market.
Put it another way, such unreasonable boom has already portended the real estate bubbles would explode in a near future.

                                   Figure 5: UK annual house price rates of change (all dwellings)
                                   12-month percentage change

                                      Source: Communities and Local Government House price Index   
               
The graph above shows that UK's house price decreased sharply from 2008 to 2009 by 25% after financial crisis and moved up until the middle of 2010, and then decreae to the average point in 2011.
According to Halifax House Price Index, I made a table to show how house price changed in Northern Ireland.
         Table 1: Northern Ireland house price index (Halifax House Price Index)

From this table we can clearly see how financial crisis impact on Northern Ireland's house price. There is a dangerous house bubble after 1998, and this bubble getting bigger until 2007 where arrived its peak (31.1% higher than 2006). As predicted, Northern Ireland's average house price decreased by 19.6% in 2008 and cannot stop dropping by 13.17 each year until 2011. Large abruptturn totally shows that financial crisis has strongly impact on Northern Ireland's average house price.
In addition, during my research I find out that UK's Luxury houses (value above 4 million pounds) were sold out with 40% more than last two years' price. Rich people invest into luxury houses instead of deposit their money in bank is apparently for the purpose of avoiding financial institutions' default risk. 'This crisis of confidence led to major liquidity problems for many banks and insurance companies worldwide.' (University of Liverpool)
Besides, as far as I concerned, Gold once became the safe-haven investment paradise for the past few years with a stable appreciation path.
                        Figure 6: House price changed in UK from 2008 to 2011

                               source: House price index- May 2010

The figure 6 shows the change of house price around UK between 2008 and 2011. Obviously all regions' average house price dropped remarkably in both 2008 and 2009, even more serious, high level house bubble exacerbated Northern Ireland's house price fell prominently. Since its average house price rose sharply before 2007 which is the fastest house price increased and highest averge price in the UK outside London and south east. Poorly, figure 6 gives the information about Northern Ireland's house price that decreased around 35% in two years while its averge house price became the lowest of any region in the UK.

Martin Ellis, housing economist at Halifax said: "Northern Ireland has done particularly badly as much of the sharp gains in the years prior to 2007 have since been reversed."

With continuous downwards trends in property market, most investors stated that they would still keep pessimistic attitude to the unpredictable house price. Expected weak economy and high pressures with household's budget put average house price decrease even further.