Analyst: UK House Prices To Fall By 20%

Every body and their dog knows just how heated the housing market has been in the UK and many other countries over the last few years.  We’ve seen record appreciation year after year, but it has now got to the point where the average earner cannot afford to buy into a property.  Worryingly, the crucial first-time buyers are starting to dry up as the property markets keeps rising to price them out.

So as a result of this crazy house price bubble we’ve all been experiencing, there are fewer buyers.  And because there are fewer buyers, the market is no longer sustainable according to a top market research group, Capital Economics.

In an interview with the BBC, Capital Economins’s Jonathan Loynes said that house price growth “will severely constrain consumer spending and weak consumer spending will mean that it will be a struggle to get growth up to the levels forecast by the Chancellor.”

This comes hot on the heels of a report from the Halifax, a leading UK mortgage lender, that gave a buoyant outlook for the property market and the recent interest rate rise intended to cool off inflation.

What will happen next is anybody’s guess, but as soon as the market starts to show signs off a drop I’m selling up and renting until it bottoms out.  Then I’ll buy.  But let’s hope it doesn’t get to that stage.

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This entry was posted on Monday, November 13th, 2006 at 1:18 pm and is filed under Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Analyst: UK House Prices To Fall By 20%”

  1. Ian Says:
    November 15th, 2006 at 7:01 pm

    20% seems like a lot. Wonder if that will happen in the US too.. As they say, the UK’s economy leads the US by 6 months..

  2. Andy Says:
    November 16th, 2006 at 12:12 am

    Is it not something like when the US economy sneezes, the UK (and the rest of the world) catches the cold? Or maybe this time the UK is leading? Who knows, but the UK property market has some of the biggest year-on-year increases in value especially in the urban areas.

  3. Newsquoter Says:
    November 17th, 2006 at 3:08 pm

    According to Miles Shipside, Commercial Director at Rightmove, more households and supply shortcomings will underpin further house price growth:
    More households and supply shortcomings will underpin further house price growth

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