The Scottish Property Federation (SPF) has warned, at its autumn conference, that the UK property industry faces a financing 'black hole'.

£160 billion worth of property debt matures over the same five year period as the £81 billion of government cuts announced by the coalition government in the Comprehensive Spending Review.

The level of maturing debt, almost twice the level of George Osborne's public expenditure cutbacks, will hit the commercial property industry’s ability to fund itself and support the UK economy.

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Phil Miller, Chief Executive of Miller Developments, said: "Very conservative estimates suggest that debt available to UK commercial property will contract by around £60bn over the next five years. When one considers that the Comprehensive Spending Review proposes cuts over a similar period of £81bn from the entire economy, this removal of credit is clearly a massive issue for both the industry and the economy as a whole."

Liz Peace, chief executive of the British Property Federation, said: "Few industries have been hit as hard as the property industry by the onset of the credit crunch and the banks are now reducing their exposure to real estate.

"There is a rapidly approaching funding gap as £160bn of debt is due for repayment in the next five years with little thought on how to refinance this backlog or how the property industry will fund itself in the coming years."

The SPF is also warning that the financing 'black hole' will only increase the polarisation between London and the South East and the rest of the UK.

(CD/GK)