Saturday, July 14, 2007

Full story from BofA

Bank of America predicts 20pc probability of a 'severe crash'

One area of particular concern is the buy-to-let market where higher interest rates could trigger a sell-off as unsophisticated investors struggle to meet debt payments. A more likely scenario, said Mr Sharratt, would be "very subdued house price inflation until 2010". He estimates that house prices are currently 20pc overvalued and it could take until the next decade for prices to rebound.

Posted by confused76 @ 01:03 AM (557 views)
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4 thoughts on “Full story from BofA

  • So what’s the other 80% ?
    A “moderate crash” maybe!

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  • One very interesting point on definition, previous price increases of 10 – 15% PA have been described a progressive and healthy market. Now the Bank of America has decided a decrease in value of 10% over 18 months is a severe crash.

    And what self-respecting BTL investor is going to read this article and recognise themselves as unsophisticated investors!!!!

    Dampened down VI spin

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  • japanese uncle says:

    I simply cannot rule out 20% drop a year in view of the scale of the BTL business in this market. BTLers can much more easily release their BTL properties than otherwise for obvious reason. After all those who have only one house in which they live find it much less tempting to sell and live elsewhere. The essential difference between the 1988-89 crash and this time around must be this, the presence of the BTL, as the most significant parameter. Unlike the case of Japan, where BTL was not this significant either, British property crash in 2007-onward could be something precipitous, worth to be called literally property Chernobyl.

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  • planning4acrash says:

    This prediction possibly doesn’t factor in the next couple of interest rate rises. It would be interesting to see where they consider IR’s will peak and when, because this type of assumption will wildly skew the prediction.

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