Thursday, January 10, 2008
“There is a two in three chance that prices fall on an annual basis at some point in 2008”
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.