PPR Estates, the UK-based property company, has published the results of its ‘Distress Index’ for the third quarter of 2011 and predicts that August enquiries indicate that the London property ‘bubble’ shows signs of collapsing.

The Distress Index takes data from the latest PPR Estates’ distressed seller enquiries in order to forecast future mortgage possessions, company liquidations and UK unemployment levels.

Its findings include the following:

Distressed seller enquiry numbers continue to climb, despite interest rates remaining at a record low. Increasing numbers of homeowners are suffering negative equity.
New possessions per quarter forecast to remain around 10,000 per quarter into 2012.
Total company liquidations also predicted to rise as full impact of Government’s ‘austerity cuts’ in public sector damages private sector firms.
Unemployment expected to increase with the public sector shrinking; larger numbers of school leavers and graduates ‘signing-on’ in September.

PPR report: ‘Outside of London, we receive hundreds of sales enquiries each week from distressed homeowners, landlords and businesses wanting to sell their properties. Increasingly sellers are trapped in negative equity.

‘However in the last month PPR has started receiving enquiries from worried property owners in riot-affected areas of London who are now seeing sales fall through and a collapse in buyer interest. This change in market sentiment may well prove to be the event that bursts the unsustainable London property bubble that’s built up over the last year.’