Words: Ashley Rigg
Published: 29th Octber 2009
UK: Economists predict 15% price fall
Capital Economics is predicting UK house price falls of 15% over the next two years as rising unemployment and growing mortgage illiquidity take hold of the market.
Although the UK real estate market is now showing signs of turning around, the recovery is unsustainable because of severe job cuts ahead in the public sector, the report states.
It also warns that any stronger than forecast growth would be accompanied by higher interest rates which would have a negative impact on affordability and therefore prices.
Two tier market
The problem with macroeconomic forecasts, other than the fact they are often wrong, is they hide regional and market differences. If the forecast is correct then the mass holiday home market will take at least two years to fully recover. However, the
banks are falling over themselves to lend money to people with impeccable credit ratings and affluent investors often prefer bricks and mortar to holding their money in cash or investing in the more volatile stocks and shares.
Further coverage on
Property Wire.
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