UK House Prices -The next bubble waiting to burst ??
Little Beaker - Wed, 21 Dec 05 :
Capital economics finally cave in:
UK house prices to only fall by 5 pct over coming two years - Capital Economics
LONDON (AFX) - One of the leading pessimists on the UK's housing market has
conceded that its prediction of an overall 20 pct collapse in prices is not
going to materialise and is now forecasting a 5 pct decline over the next two
years.
Though Capital Economics continues to think that the UK's housing market is
"fundamentally overvalued", it has adjusted its view of the likely scale and
timing of the adjustment, given lower interest rates, higher-than-anticipated
employment levels and a loosening in mortgage lending criteria.
"None of this is to suggest that the danger of a sharp fall in house prices
has evaporated altogether," said Ed Stansfield, Capital Economics' property
economist.
"As things stand, there would appear to be a growing chance that the
adjustment to lower valuations will come about largely via a period of broad
nominal price stagnation, allowing both real house prices and the house price to
earnings ratio to decline gradually over a prolonged period," he added.
The group's new forecasts come in the wake of a raft of solid housing market
news, most recently from the Royal Institution of Chartered Surveyors. In its
monthly survey yesterday, RICS said house prices rose for the first time in 15
months during November with London leading the charge higher.
