House prices unstoppable say experts

House prices look set to continue to rise at an unstoppable rate for the foreseeable future, experts have said.

At the Great Housing Debate, run by the Wriglesworth Consultancy, lenders, economists and housing industry experts agreed without major economic decline house prices would keep rising.

"A serious correction in the housing market traditionally occurs as a result of a sharp economic downturn, which looks extremely unlikely. It would take a reversal in recent increases of income multiples or a considerable tightening in lending criteria by banks, for there to be a serious downturn in prices," commented Nigel Terrington, Paragon Mortgages chief executive.

David Miles, Morgan Stanley chief economist added: "Public expectations regarding house price growth is key to the market's stability. Growth would need to fall successively for a number of months before peoples' expectations, and therefore prices, were seriously impacted."

With prices increasing so strongly over the last decade, experts also agreed keeping homes affordable would be down to offering mortgages with more income multiples.

"Focusing on income multiples alone is not helpful – they must be considered instead in the context of affordability," said Michael Coogan, director general of the Council of Mortgage Lenders.

He added income multiples of six or seven could be a possibility in future.

"Generally, if people are managing their debt on higher income multiples then this suggests affordability will allow it, as demonstrated by the fact that arrears are still historically low."

Morgan Stanley's Mr Miles added: "Fixed-rate deals are often more suitable for those benefiting from higher income multiples, as they are able to eliminate possibly the biggest risk to their debt – rising rates."