Thursday, November 23, 2006
Adopt the position?
Apparently house prices could well fall at some point over the next couple of years. Now regular MoneyWeek readers will know that we've been expecting some sort of collapse for quite a while - but it's not just us who are saying it this time. No lesser authority than David Miles, Morgan Stanley's chief UK economist and former adviser to the Treasury, has reported that "a sharp fall in real house prices is likely at some point in the relatively near future." So why does he believe this? Miles believes that as much as half of the growth in house prices since 1996 (up about 187%, according to figures from Halifax) has been driven by speculation, with only half down to fundamentals, such as the supply and demand issues that property bulls keep citing. He's not sure of exactly when the slump will come, but seems to think it'll be pretty soon - "it could yet be one or two years away".