| UK
House Prices Situation at 20 7 2007: Fairly stable,
little change in most areas
UK
House Prices Forecast: Minimal growth for the rest of
2007
House
Prices Likely To Fall In Real Terms in 2008 - CML
The
trade body representing more than 95% of UK mortgage
lenders has forecast that house prices
are likely to rise no more than 2% - 3% in 2008 - the
weakest growth in thirteen years.
Further
evidence of poor affordability comes from the first-time
buyer market - CML figures show that roughly 35% of
mortgages were taken by first-time buyers in the first
quarter of 2007 - a big drop from the long-term average
of 50%.
The
Council of Mortgage Lenders believes that the combination
of higher interest and high prices will put the squeeze
on homeowners' finances. Michael Coogan, director-general
of the CML, said, "I don't believe there will be
a crash, but clearly a slowdown is more likely in an
environment of higher interest rates."
If
house price inflation falls below general
inflation, property values will fall in real terms,
leading to the gentle slowdown in property prices that
so many experts believe is inevitable and necessary.
UK
Property 20% Overvalued - Bank of America
New
research by the Bank of America has concluded that UK
property is overvalued by approximately 20% at present.
The
bank believes there are signs that the market is peaking
and forecasts a 20% chance of a significant price adjustment
- a crash - sometime in 2008/9.
Matthew
Sharratt, an analyst for the bank commented that:
"Leading
indicators and our own econometric work point to a significant
slowdown in the UK housing market later
on this year and into next…"
The
bank's view is that UK house price
inflation will remain very subdued until 2010, as buyers
across the UK are affected by poor affordability.
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