The best of British property: From the expensive to unique
Fri, May 20, 2016The best of British properties from the expensive to the unsual
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The best of British property: From the expensive to unique
House price bubble is all set to explode, property experts warn
06-04-2016
HOUSE prices continue to surge but fears are growing that the latest boom could end in yet another bust.
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Even normally bullish estate agents are expressing concerns about the sustainability of prices
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House prices could plummet by almost half, Fathom Consulting has warned
Prices have surged to average 6.1 times earnings, a “whisker” away from the market’s peak valuation of 6.4 times earnings which it hit just before the financial crisis.
By holding base rates at 0.5 per cent since March 2009 the Bank Of England has slashed mortgage repayments and stoked housing demand, according to Fathom.
It warned that house prices will need to plummet by up to 40 per cent to come into line with the pre-2000 average of 3.5 times earnings.
Alternatively, household incomes would have to grow at 10 times their current pace for the next five years.
“Real mortgage rates will not remain as low as they are today. And when they do rise the fragile arithmetic supporting the elevated house price-to-income ratio will unravel,” a Fathom spokesman said.
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Prices have surged to average 6.1 times earnings
“All the while ‘lower for longer’ rates of interest are inflating the housing bubble and worsening the inevitable correction.”
Haart chief executive Paul Smith warned that trouble is brewing as buyers are abandoning the market due to high prices.
“There is trouble in paradise as we start to see a big slump in buyer demand.”
Smith, whose company operates estate agencies haart, Felicity J Lord and Spicer McColl, said the nation was “near the limit in terms of price rises” and growth and transactions look set to fall. He said sellers must be more realistic.
“Properties are in danger of being overvalued and they will struggle to sell.”
The shortage of decent property for sale could propel house prices even higher in the short run and buyers should be wary about over-stretching by taking on too much debt.
GETTY
Even normally bullish estate agents are expressing concerns about the sustainability of prices
GETTY
House prices could plummet by almost half, Fathom Consulting has warned
Prices have surged to average 6.1 times earnings, a “whisker” away from the market’s peak valuation of 6.4 times earnings which it hit just before the financial crisis.
By holding base rates at 0.5 per cent since March 2009 the Bank Of England has slashed mortgage repayments and stoked housing demand, according to Fathom.
It warned that house prices will need to plummet by up to 40 per cent to come into line with the pre-2000 average of 3.5 times earnings.
Alternatively, household incomes would have to grow at 10 times their current pace for the next five years.
“Real mortgage rates will not remain as low as they are today. And when they do rise the fragile arithmetic supporting the elevated house price-to-income ratio will unravel,” a Fathom spokesman said.
GETTY
Prices have surged to average 6.1 times earnings
“All the while ‘lower for longer’ rates of interest are inflating the housing bubble and worsening the inevitable correction.”
Haart chief executive Paul Smith warned that trouble is brewing as buyers are abandoning the market due to high prices.
“There is trouble in paradise as we start to see a big slump in buyer demand.”
“Properties are in danger of being overvalued and they will struggle to sell.”
The shortage of decent property for sale could propel house prices even higher in the short run and buyers should be wary about over-stretching by taking on too much debt.