In addition to the fear over negative equity in the British property market a new reason for concern is emerging. The economic slowdown has heralded a wave of forced property sales that could yet tip a downturn in real estate markets into a 1990s-style property crash. 

Some new buildings could be left empty, while others could be taken over by creditors, causing the all-too familiar drag effect that haunted the industry for more than a decade last time around. 

Insolvency experts are also gearing up for an expected surge in commercial property-related business, even though any debt-related distress has so far been limited to overstretched buy-to-let speculators and regional residential developers. 

The speed of the correction in property prices since the market peaked a year ago has been far faster than the last property crash nearly 20 years ago, with commercial real estate values down by a fifth and house prices almost 10 percent down. 

UK economic growth slowed to 0.3 percent quarter-on-quarter in the first three months of 2008 and is expected to have fallen lower again in the second quarter. 

The ensuing damage has been manageable to date, partly due to the lessons learned during Britain’s last property crash. Tighter regulation and changed attitudes mean UK banks are less aggressive than they used to be when it comes to clamping down on problem home loans. 

Property developers have also been more disciplined than in the early 1990s, leading to a greater balance between supply and demand that reduced the potential for a massive overhang of new buildings that might take years to work off. 

However, there is likely to be at least some forced selling of UK property in the next few years.

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