Author Topic: UK house prices are set to fall soon  (Read 3231 times)

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UK house prices are set to fall soon
« on: June 13, 2014, 09:26:35 am »
We've been predicting the bubble and subsequent crash for quite some time now.

It would appear George Osborne is now distancing himself from the fall-out from the bubble he created with "Help to Buy" by handing responsibility over to the Bank of England saying previously  that the BoE had all the tools necessary to act to prevent the market overheating.

Last night BoE Governor Mark Carney, said that interest rates are likely to rise sooner than most people (the markets) previously expected.  Whilst a rise will be small and gradual, it is now a near certainty that interest rates will rise before the end of 2014, well before the May 2015 general election.

It is also proposed to limit how much banks can lead to borrowers, with lower, strictly controlled multiples of salary being dictated to lenders by the BoE.

Limit the supply of mortgage money and prices have to fall. 

In the US, sales of new homes are down 4.2% and sales of "previously-owned" homes down 7% on a year ago.
The rapid recovery of house prices in the US has put off many potential buyers, whilst at the same time mortgage rates have risen, undermining consumer confidence, especially as wages rises have stagnated.

Here in the UK, the average property price has now exceeded the previous peak in 2007.
Nationwide's latest figures show the average UK home costs £186,512 rising 11.1% in the last 12 months.
Mortgage approvals in April were 17% below the figure in January as banks put restrictions on the amount they would lend to buyers.

The market is set for a nasty correction, those buying now are doing so at the top of the market and risk the real prospect of negative equity down the line when rates rise back to normality and historical average levels.
For those buying 80% of a new home, paying a premium for doping so (the average new home price is up around 20% since this time last year) the risk is even greater!
You have been warned!
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