The property market is very close to the peak reached just before the 2008 crash, an economic forecaster has warned.
Fathom Consulting says UK house prices are now 6.1 times average earnings, close to the pre-crash peak of 6.4 times.
Fathom says house prices either need to fall by up to 40% or incomes need to grow at ten times their current price for the next five years for homes to be affordable.
Fathom is forecasting an inevitable “sharp correction” when interest rates start to rise. However, it admits this is a distant prospect and that interest rates are likely to stay on hold until at least early 2018, regardless of the EU referendum result.
It does however forecast a 5% to 10% drop in transactions if the referendum results in a leave vote.
Fathom says that “lower for longer” interest rates are inflating the housing bubble and will worsen the “inevitable correction”.
Remember how often we have these corrections? Usually about every 7 years. When did house prices start to pick up after 2007 in this area? That will be 2009. Ooops. It might just be time for another – very soon.
This latest assessment just seems to show that it is just a little more likely.
I see the NAEA are reporting record low levels of enquiries. Could it be that the only reason the market is holding up so far is because of the record low levels of supply balancing everything out.
The good news about all this is that it will take REAL estate agents to sell homes in a recession. It will be interesting to see how the call center agents do in a recession. They have never been tested in such a market.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I don’t think we have an immanent market correction but we will see stagnation for the next 5 years in London/South East with my favourite caveat:
Unless something (unusual/big/unexpected) happens!
Rest of UK will muddle along with some areas increasing in value, simply because they still haven’t caught up with the rest of the UK.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
This sounds just like the scatty news reports we used to hear from Capital Economics. Can’t say I’ve heard of Fathom Consulting, maybe they’re trying to create publicity for themselves by writing some newsworthy copy? It’s very easy to write an article making wild predictions, plucking figures out of nowhere which bear no relation to reality, not forgetting the regional differences which exist across the UK. Unfortunately the media love to report such articles to fill column space and we all know how inaccurate these so-called experts can be and after 50 years in the business I ignore all the predictions of doom and just get on with it!
Could it be the impending Referendum is the cause of the current property shortage? In my experience we usually see a quieter market in the run-up to an Election? Whatever the outcome people will still need somewhere to live!!!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Stagnate, correction, slow growth.
More like stable! – Prices cannot keep climbing. I do not think they will drop we are just entering a more stable market that is not as fast paced.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register