A new report states that house prices are not likely to crash, as several other reports predict.
House prices have doubled in the last ten years. Property prices are running at higher multiple of incomes than ever before, with forecasts of a house price crash likely to happen soon.
Last week a leading economist David Miles stated that significant falls in house prices are likely in the near future.
This argument was rejected by other economists today.
House price inflation has been driven by speculation in the last few years and such speculative bubbles are going to have to burst.
There is a core problem with the UK housing market that prevents a housing market meltdown: housing demand far exceeds housing supply.
There are a number of key main reasons for this:
The UK has limited housing supply. There are more people who want to live in the UK than ever before as well as fewer people occupying each property. There are actually more Britons who wish to live in houses than before and there are more houses needed per person.
First time buyers buyers do not compare income to house price. They do not view house price relative to salary; they work out what they are able to buy. Interest rates have been 5% or below in the last five years. Mortgage payments take up significantly less of household income now (20%) than before the crash in 1989 (34%).
London is still being invested in by the rich countries of the world. This means that there are large amounts of cash going into the City of London. A lot of this winds up in the UK property market.
The lack of transport sees more people wanting to reside in certain areas, thereby boosting demand.
 |
| Property Guides |
Buying property |
| Find Property in the UK |
| My estateagents | |||||
|
Reasons Why House Prices Are Not Likely to Crash
Tue, 28 Nov 2006
Recommended links
House Prices Are Likely to CrashHouse Price Growth Up 8 Per Cent
October House Price Rise
We Are Facing a Mortgage Squeeze
Apply for a Mortgage
| Bookmark: |  |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
| Estate Agents news |
|---|
| Estate agent selling fees go up as prices drop - Wed, 30 Jul 2008 |
| First-Time Buyers Returning To Housing Market - Wed, 23 Jul 2008 |
| Slump In House Sales Continues - Wed, 16 Jul 2008 |
| More News |
