Commercial development has continued its steady decline in recent months, with reports indicating that it has fallen at the fastest rate this past August since June 2009. The data, provided by Savills, reflects not only major decreases in the commercial zones but also public and private sector development throughout the country, showing the first decrease in private developments since July of 2009. As a whole roughly 28.3% of all commercial property developers showed a decrease in activity compared to a meager 15% showing a rise, leaving the national average for the month at -13.3% (well below July’s +0.6% and the 0.7% year-to-date average).

This fall is seen to be contributed to a number of reasons ranging from decreased consumer confidence on a domestic level to even the increased restrictions on many overseas mortgages being granted by local lending institutions to foreign investors looking to establish holds in the UK market. Fears that the property market is heading for a double-dip and will soon face large drops in overall value in the coming months towards 2011 are only working to add to the current woes and many feel this will in turn become a self-fulfilling prophecy as consumer wariness gros stronger day by day.

On the positive side of things, however, the fact that there is still a 15% recorded increase in some areas is a strong indicator that no matter how bad the situation may seem it is not a universal occurrence. On the contrary, many areas have proven to be virtually immune to the effects of the property market downturn, with London in particular still remaining a primary point of interest for both domestic and international investors. Whether other areas will see the same growth towards winter when the property market is traditionally the lowest, however, is still yet to be determined.

As the credit crisis continues to affect millions of people around the world the tension between generations throughout the UK is growing, with baby boomers and other pensioners currently enjoying many of the benefits of their age thanks to the skyrocketing house prices while their progeny are facing increased debt and other difficulties associated with one of the greatest credit crisis scenarios of all times. This is particularly true in highly urban areas such as London, where it is reported pensioners over the age of 65 maintain ownership of their homes with no debt whatsoever that now total in the area of £250 billion.

Despite continued low mortgage rates offered by lending institutions and other initiatives designed to stimulate the real estate market and encourage first-time buyers to get involved on their own many families simply cannot afford to do so. This, in turn, has led to more and more tension growing between the younger generations and their parents as without their family’s support the likelihood many individuals simply cannot even afford to even live away from home no matter what incentives may be offered.

Many lenders throughout the country have been toying with a number of different offers to make available to first-time buyers and other investors throughout the country in order to encourage them to become more active in the market. These are being done in the form of both tracker and fixed-rate mortgages that are affordable yet still designed to provide lenders the protection necessary should another economic downturn occur.

Unfortunately at this time the growing over-saturation of high-priced supply in many areas coupled with the fears that a double-dip is nearing has worked against the overall mindset and hopes for recovery for many people, meaning that now more than ever tensions are mounting beyond any situation that has been seen in the recent past and many families are facing the consequences of it.

Anticipated cuts to the Local Housing Allowance (LHA) are seen by many to potentially be a major blow to the recovery effort of many economic areas, while some 800,000 current beneficiaries of the LHA would be forced to move away from areas of high job zones that may assist them in getting back on their feet after the economic crash caused widespread disturbances amongst many industries.

This affected individuals are generally those that have been particularly hard pressed due to unemployment and other financial strains and are unable to receive additional funding for housing for a variety of reasons, even bad-credit mortgages based upon the current low mortgage rates due to stringent lending institution policies. This has resulted in a boom in LHA recipients in recent months.

The change, capping LHA at 30% of standard rents, is seen by many recipients and the British Property Foundation (BPF) as a move that would effectively put many out of their current residences in high-job neighbourhoods and force additional economic difficulties on many individuals currently requiring assistance in many areas. When coupled with the ongoing difficulties of many organizations in receiving commercial mortgages to expand businesses in some areas this could add greater strain in many regards.

Whether or not this will have a lasting impressing on the overall economic recovery effort in some areas is still undetermined, however many experts feel that high-job districts such as those found in most major cities (especially London) will be receiving the brunt of the change and have particular difficulties in adjusting accordingly as more and more of the low-income workforce is forced to seek assistance in other less expensive areas and thus prevent a widespread recovery for the majority of impoverished individuals across the nation.

With many lending institutions becoming more and more concerned over the growing potential for homes to drop significantly in value over the coming years many mortgage holders with low equity in their homes that are currently on interest-only mortgage options will be moved to repayment plans when their current agreement comes to an end. This could means a substantial change for many current mortgage holders, with those currently holding a mortgage of £150,000 potentially needing to pay an additional £390/month (assuming a 3% interest rate) even with no additional equity needing to be added to their loan amount.

News of the upcoming shift for many lending institutions along with speculation that the current 0.5% low interest rate offered by the central banks has caused many borrowers currently on interest-only options to seek out other fixed-rate mortgage approval before their current mortgage expires, yet at the same time many people simply can not afford to make a move such as this given their own financial limitations. In fact, the new regulations being looked at by most major lenders throughout the country are only for those holding less than 25% equity in their homes – generally those individuals who do not have any additional funds to spare for another major mortgage change immediately should it be needed for their long-term financial benefit.

Despite the fact that this move may come as somewhat of a blow to many home owners throughout the country it is generally seen as a smart move by many economists in order to minimize the impact a second property crash may have on financial institutions. With even re-mortgages hitting an all time low and many people looking at minimizing their amount of extra capital used in the market financial measures are seen by many experts as needing to be taken sooner rather than later to curb any negative shifts occurring as winter approaches.

With the property market fluctuating back and forth many people are growing concerned about a new figure – roughly 60% of all mortgages issued in July were for home purchases. While some may see this as a positive sign for home buyers at the same time it is somewhat concerning economists seeing a regular decline in re-mortgages both applied for and granted throughout the year.

A mere two years ago re-mortgages on homes throughout the country accounted for roughly 75% of all mortgages offered to home owners, though since that time the number has remained in a steady decline and its current figures of approximately 40% are somewhat unnerving for many lenders. This is seen to be caused by a number of factors, primarily the continued low mortgage rates offered by lending institutions thanks the continued record low interest rates helping both tracker and fixed-rate mortgages as well as the fact that most people have moved away from general spending and debt accrual this year towards debt repayment and elimination.

In some ways the current trend is beneficial in the long run as currently a large number of individuals have substantial debt accrued in their names, with a large portion of pensioners also still maintaining debt on their homes well into retirement. In the short-run, however, concerns over the lack of lending are making many financial establishments worried over their cash flows and whether or not they will be able to maintain some current attractive offers on the market and still retain profitability.

As of yet the interest rates established by the central Bank of England are keeping most lending agreements low, though if rates continue and inflation picks up (as is being seen more and more often in recent months) then it is highly probable that home buyers and sellers alike can expect to see a much more competitive and difficult to navigate market looming in the future.