Friday, Nov 28, 2008
Housing Market Risks in the United Kingdom
Federal Reserve: Housing Market Risks in the United Kingdom
House prices in the United Kingdom rose rapidly in recent years. The run-up, larger than any other in U.K. history, leveled off early last year. House prices are currently declining at rates faster than those seen in the early 1990's downturn. The housing downturn, however, is far from complete. Using the price-rent ratio as a guide, house prices are likely to fall at least a further 30 percent before leveling off. Given the historic links between housing and real activity, the downturn is likely to be associated with very slow growth. Going forward, we recommend the price-rent ratio as the appropriate measure of housing valuation.
Posted by stephen_zz @ 09:23 AM (400 views) Add Comment
2 Comments
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1. amjidk said...
comparing the price to rent rations here in Bradford, typical house Value in 2000 (2 bedroom) was around 30k with rent of approx £200 PCM, now Typical house Value is around £120K Rents are around £400PCM therefore according to the rent to house price formula houses need to come down to 60k, i.e. 50% fall........
2. mark said...
reading that..wow... so we can expect 50% or even 60% drop in prices...