Will there be a house price crash in the UK at any point in the future?

Answer 1

Wait and see

Danny Gabay, UK economist at JP Morgan bank, said Mr King was setting out "the risk that many UK economists most fear, but few have dared spell out.

"[This is] that the housing market poses the greatest danger to the UK's medium-term stability."


On Wednesday, the minutes from the Bank of England's latest interest rate-setting meeting showed that worries over the surging property market had led it to keep rates on hold at its last meeting - despite pressure from other quarters for a cut.

The minutes said a rate cut could fuel house price rises and borrowing even further "increasing the risk of a sharper fall in consumption at some point in the future".

"This is a committee that is moving away from cutting rates," said John Butler, UK economist at HSBC Markets.

"Quite simply, there appears to be a growing feeling amongst some on the [Bank's] MPC [monetary policy committee] that they may have over-stimulated the housing market and that now there is little the committee can do but wait-and-see."

Severe strain

UK house prices have soared for the past five years, fuelled by a shortage of properties for sale and low borrowing costs.

The increase in prices has helped to prop up spending by homeowners, and has also pushed up mortgage lending to record levels.

Economists fear that a sudden increase in interest rates or unemployment could put severe strain on the finances of homeowners and borrowers alike, cutting consumer spending and endangering economic growth.

Cutting interest rates would encourage more mortgage borrowing, further fuelling house price inflation.

Slowdown coming?

Mr King's speech coincided with publication of a report by the Royal Institution of Chartered Surveyors that showed British house prices are still growing at an average of about 20% a year.

And lending figures from the British Bankers' Association (BBA) showed that mortgage lending continued to charge ahead last month.

The BBA said mortgage lending surged by £5.6bn in October, the biggest monthly rise since records began.

But there was a hint that the housing market could be slowing from another house price survey released on Wednesday.

The property website Rightmove said house prices slipped by 0.2% in October, the first drop since the start of the year.

Rightmove said London was leading the decline, and falls in the most expensive areas were now spreading to other areas of the capital.

It said average house prices were now at 6.19 times the level of earnings, an "unprecedented" figure, which was only possible because of low interest rates.

Outlook uncertain

Mr King said he did not know what the outcome for house prices would be, but stressed that "changes in asset prices can have a major impact on levels of spending".

Mr King's remarks echo his warning last week that house price inflation posed a significant threat to the UK economy.

Speaking on that occasion as a member of the rate-setting monetary policy committee, Mr King said the risk of an abrupt slowdown in house prices was greater the longer the property market boom continued.

Answer 2

I;m no longer particular even if the point that has been ignored to this point is that the united kingdom at the moment has a intense percentage of homestead possession compared to different eu international locations the position human beings frequently purchase when they attain their previous due 1930s and Nineteen Forties. i'm no longer at the moment particular what condo expenditures are doing yet i think they're probable going up. contained in the south east i believe there are not any further sufficient homes for lease and so provide cancontinual expenditures. i'd suspect there'll be more effective purchase to allow investors getting into the marketplace, it continues to be a rather youthful marketplace, human beings were renting out resources for years yet in undemanding words contained in the in simple terms precise 10 have we had off the shelf mortgages to handle the transaction. This has made this variety of funding extensively more effective instantly ahead. My suggestion to you is be creative search for deals, evaluate paying for resources in inspite of way you are able to. purchase as component of a team or purchase to allow in an section you are able to manage to pay for and lease to others, if the realm you stay in is too expensive. there'll in all likelihood be a correction yet i does no longer assume it, the present indications do not have it being in all likelihood. i imagine that is probable wishful questioning on those that pick to get into the marketplace. ought to promote a good number of papers if someone envisioned it yet imagine the commercial device is heading in route of even more effective stability into the destiny. i elect one too and that i own resources already yet i don't believe of it is going to ensue.