Thursday, January 10, 2008

“There is a two in three chance that prices fall on an annual basis at some point in 2008”

British housing market facing tough years ahead

This articale gets some things right: the market was fuelled by cheap credit. ...but it also gets a lot wrong: underpinned by a shortage of supply on a small island. Ed Stansfield, property economist at consultancy Capital Economics, which has no mortgage portfolio to defend, says UK housing is even more overvalued than in the United States, which is now in its deepest housing slump since the 1991 recession. The credit crunch that has caused market rates for interbank lending to soar over recent months and create turmoil in financial markets is only starting to exact a toll, he says, predicting a 5 percent price fall this year and 8 percent next. ...But analysts attach only a 15 percent probability to a U.S.-style market correction in the UK.

Posted by disillusioned @ 11:44 AM (683 views)
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6 thoughts on ““There is a two in three chance that prices fall on an annual basis at some point in 2008”

  • “underpinned by a shortage of supply on a small island”. Don’t be silly, there are bags of cheap houses in Newcastle. Housebuilders own massive land banks, look at their accounts…!

    The blame for soaring house prices should rest with the government and the EAs who encouraged each new borrower to “go for something bigger” with all the EA benefits in commissions, morgage arrangement fees etc.

    Time for a reckoning – perhaps some hardworking FTBs will benefit from the reposessions, I hope so.

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  • shortage is the great myth and lie in the housing market at the moment.

    There are loads. It’s that people are asking stupid prices….that’s the issue.

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  • disillusioned says:

    As we’ve said many time on here before. If there was a shortage, rents would have increased dramatically, and they haven’t.

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  • Rents are actually falling even in London.

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  • “underpinned by a shortage of supply on a small island”

    how long do we have to listen to this tosh…… 2 words for everyone “New Zealand”

    there are so many residential residencies down there, untold amount of land, yet a housing bubble just as healthy as its anglosaxon bretherens

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  • Is n’t the ending the really frightening bit? “The belief of participants in the housing market that the
    Bank is effectively underwriting house prices…”

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