House price crash warning by Finance News Bulletin

Published: 01/12/07

The housing market may be heading for a sharp drop, a leading expert will caution today Economist David Miles says possessions prices will probably drop dramatically in the next few yearsWARNING: 'A sharp fall in real home prices is likely in the near future,' says David Miles, leader economist at Morgan StanleyThe collapse will come when the rapid go up in prices starts to end off, according to Mr Miles, who is a former adviser to Gordon chocolateDemand has been heavily influenced by the expectation that prices will carry on to rise quickly

When the big yearly rises fail to materialise, 'significant' waterfall are likely'A sharp fall in real house prices is likely at some point in the relatively close to future, though it could yet be one to two years away,' his report concludesMr Miles, chief UK economist for investment store Morgan Stanley, believes that more than half of the go up in home prices has been fuelled by the speculation that prices would continue to go up rapidlyThe rest of the go up should hold because it is based on population enlargement, income enlargement and reductions in the financing expenses of mortgages

The report said buyers wait for prices to continue rising by ten per cent per year, compared with two per cent in 1996But when the steep rises fail to materialise, the bubble could rupture However, Mr Miles cannot forecast when this is going to happen'The model shows why annoying to 'call' the housing market over the next year or two is pretty much hopeless,' he told the Financial Times

Meanwhile, a leading property research solid warned that a decade of massive house-price price rises will come to an abrupt finish next yearIt believes house prices will fall in some areas and overall, values will go up only 4% next year - the negligible increase for ten yearsAt this level, the price of the standard home would only just keep up with price rises, currently 37%

The research firm Hometrack warned that some parts of the country, such as East Midlands and Wales, may only knowledge growth of 1%Richard Donnell, manager of research at the firm, said there is a threat that home prices could plunged into negative territory in some areasMr Donnell said: 'If rates were to move higher than 525% [currently 5%], this would certainly consequence in even lower house-price enlargement

'Major increases in unemployment remain the greatest threat to the market'There have been rising concerns that as banks offer mortgages of five or more times a worker's pay, borrowers are overstretching themselvesLast week, the Financial Services Authority warned banks to tell their customers to let for a 40% drop in house prices when calculating mortgagesin spite of rising prices in Britain, 800,000 Britons own a next home overseas, research reveals today

The number buying overseas has jumped 250,000 - or 45% - over the last two yearsMany of those who decide to make a home overseas say they are ill of life in the UK And the figure is likely to keep on growing It is predicted that up to twom will own a second home by 2025

If it reached this height, one in ten UK home-owners would also own a property in a overseas country, the report from the research firm Mintel saidMany said they were enthused to buy a home overseas, or are considering trade one, as existence in Britain is 'far less appealing than existence abroad'Spain is the escapee winner, with more than 40 per cent choosing a second house there France is the next most popular purpose followed by Australia, Italy and America

If you're an saver - the key message is that equities might have a improved outlook If you're a first time buyer, then there seems small risk in taking time lookingSorry Geoff, but it's between you and the chief economist of Morgan Stanley, then I believe I'm going to trust the latter It illustrates his tip quite nicely, that people expect house prices to rise indefinately

Despite the recent darkness and doom, the experts predicting a accommodation crash have been completly wrong 9 times out of ten There are still thousands of people requiring homes and renting is almost as luxurious as buying I forcast a slow down of home price increase if wage demands stay subdued but no collideBring on a collide

Anyone that owns a house and is considering moving up a rung on the ladder will benefit Anyone that is planning to buy for the first time will advantage Anyone who is staying put will not suffer because you never see the moneyNaturally though once a price alteration occurred all these people who would benefit would rush back in and prices would go back up, however there is always a boundary to how far prices will rise

If demand for housing is as great as we are led to believe, why have rental yields compressed so much In my region the typical gross give way is 45-5% on 2 bed houses, a segment of the market where we are told there is an sharp shortage At current prices, rent does not even wrap the mortgage interest

Personally, speaking as a landlord, the only reason I have not sold up is that I would crystallize a big capital gain, a factor which I believe is dissuading many BTL landlords from booking profits which creates an artificial shortage of housing store for saleJust like those who thought the technology fizz in the 1990s would go on forever

everything comes to an end finally Its not a question of IF but WHEN And the longer the high-quality times keep rolling the sharper the correction will be The only people who say the goods era will keep leaving are those with a vested interest - ignore these people

You have been warnedSelect a loan word 12 months (1 day 24 months (2 years) 36 months (3 years) 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 existencePlease select a type of insurance Life insurance Home and contents automobile Breakdown services Health - medical Health - dental journey Pet -

Visit original article: