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Home >> Property and Real-Estate >> UK: Overvalued house prices threaten crash

31.03.2007, 13:33 quote

Anonymous

Quote:
The figures coincide with a warning from one of the country's leading economics experts that interest rates could rise by more than one per cent to more than six per cent within 18 months.

This comes days after statistics showed that the average homebuyer is borrowing 6.5 times their salary when taking on a new property.

The investment bank Morgan Stanley and the consultants PriceWaterhouseCoopers warned that there is a high chance of a severe fall in house prices in the coming years.

Prices rose sharply over the past decade, sparking fears that, when families realise they cannot afford to a new home, the market could be badly hit, with knock-on consequences for the rest of the economy.

But many first-time buyers, whose numbers are already at record lows, will still be prevented from taking their first step on to the housing ladder this year, since prices are unlikely to stop rising in the near future, Lombard Street Research (LSR) warned. The analysts were the only major forecaster to predict correctly rapid house price inflation of almost 10 per cent in 2006.

An LSR economist, Diana Choyleva, said she thought prices could rise by as much as 15 per cent in 2007. But she warned that if the Bank of England did not prevent people taking on excessive debt by raising interest rates, it risked laying the foundations of another major collapse.

"The Bank could risk finally spawning a house price bubble in 2008," she said.



more here:

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/01/02/nhomes02.xml


What do you think?

 

31.03.2007, 15:34 quote

Anonymous

Hm...and what do you think of that:

http://news.bbc.co.uk/2/hi/business/2732645.stm

somehow I can not imagine the red line will stay there forever....and even 2 or 3 percent higher would lower house prices a lot I think...

 

29.10.2007, 12:00 quote

Anonymous

Art:
The CML told Reuters in July it expected house price inflation to fall to 2-3 percent in 2008, but a global credit market crunch this summer had exacerbated the slowing trend.

The impact of higher interest rates and an estimated 1.4 million households whose short-term fixed-rate mortgage deals are due to expire in 2008 will now be even worse.

There will be 45,000 repossessions in 2008, up 50 percent from 30,000 this year and double the 2006 level, the CML predicted.

The number of mortgages more than three months in arrears will rise to 170,000 (1.42 percent of all mortgages) by the end of 2008 from 145,000 (1.22 percent) at the end of this year.


Let's wait until next year.....or 2009. Mortgages might easily go up to 7-8% again. If environmental laws will force home owners to invest money in refurbishing in order to reduce the Co2 production due to badly insulated walls, windows and roofs, this might increase the number of repossessions. Also more and more people in the UK now invest abroad as investment in property looks worse and worse compared to your savings account - especially if interest rates rise: then the gap between borrowing money and interests on saving will become even bigger (as it used to be in the past).

http://marketoracle.co.uk/Article2588.html

 

29.10.2007, 12:12 quote

Anonymous

ScotInCornwall wrote:
If interest rates go up a bit, then a few more people will default, but that'll only slow the market, not kill it.


Buy-to-let (which was a huge market) is basically dead now - as it is impossible to buy and let without loosing money. Rents are not high enough, house prices are too high and interest rates are going up, too.

 
 
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