Preventing the property crash of 2028
Friday, 12 December 2008 1:27 PM
The seeds of the next property bubble and crash of the 2020s are being planted now, according to new analysis.
Yolande Barnes at estate agents Savills explained at the launch of the UK Housing Review, how the UK property market rises out of the current slump could lead to the next bubble.
However, she explained the housing market would start to see recovery in 2009, but more house price falls are to come.
"We are a long way there," Ms Barnes said.
"This quarter will see some of the steepest falls."
She also claimed there were cash buyers "queuing in the wings" of the market waiting to pick up bargains - running out of faith with banks and equities.
The devaluation of sterling could also see foreign buyers move in to the markets.
"All the bargain hunters could lead to the 2020s overheating," she claimed, explaining property cycles are almost inevitable - arriving every 20 years or so.
Also speaking at the launch of the Building Societies Association (BSA) and Chartered Institute of Housing review, Michael Ball from the University of Reading was less upbeat about the housing market.
"If the housing market was a person it would be diagnosed as bipolar," he said.
He explained while we had the mania in recent years, "we should all be depressed now".
"I am extremely pessimistic about where the finance will come from," Professor Ball said.
"Banks were rescued at a big cost and problems will persist for a long time."
He warned there will be more drops in prices in 2009 as people who have put off selling cannot do so forever.
Ms Barnes warned the state of the UK property market is not as desperate as in the US.
"In the US, one in 16 households face repossession. In the UK it is one in 200 households," Ms Barnes said.
In the mortgage market she noted some subtle changes.
""We are going back to a monopoly of mortgage supply. It is a situation people are competing to be borrowers, and not lenders competing for borrowers."
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