does this mean the housing market is going to fall?

Question

http://news.bbc.co.uk/1/hi/business/6172088.stm
House prices 'set for slowdown'

UK property wealth has tripled in the past 10 years
The UK's rampant house price inflation is likely to slow down dramatically in the next year or two, according to a former government economic adviser.
The prediction comes from David Miles, the Morgan Stanley chief UK economist.

House prices have risen more than twice as fast as general inflation in the past 10 years.

But Mr Miles, a former government adviser on the mortgage market, says house prices will soon slow down so much they lag behind general inflation.

We are likely to have significant falls in real house prices once those expectations come down, but... the timing is very hard to fathom

David Miles, Morgan Stanley


Housing market: facts
Why are house prices high?
First-time buyer woes

However, Mr Miles cautions that predicting exactly when prices may fall is extremely difficult.

"A substantial fall in real house prices is likely at some point in the relatively near future, though it could yet be one or two years away," he warned.

Three years ago, Mr Miles wrote a review of the UK mortgage market for Chancellor Gordon Brown.

Coming bust?

This latest report, entitled UK Housing: How did we get here, is the latest prediction that the current house price boom will come to an end some time soon.


Earlier this month, accountancy firm PricewaterhouseCoopers predicted there was a one-in-three chance of UK house prices falling by 2010.

And last week, the Financial Services Authority (FSA) warned banks to make sure they could survive if house prices fell by as much as 40%.

This year, however, prices have started to accelerate again and are now running about 8% higher than a year ago.

Recent figures from the Land Registry revealed that the average property in England & Wales now costs more than £200,000.

Speculative expectations

In absolute terms, UK house prices have almost tripled in the past decade, but compared with the rise in prices generally, "real" house prices have roughly doubled - up by 112%.

Mr Miles says the single biggest factor driving up house prices in the past decade has been the expectation of buyers that prices will keep on rising.

As well as speculative expectations, the main factors pinpointed by Mr Miles are the rise in people's incomes, the rapid growth of the population and the cheap cost of borrowing due to low interest rates.

Of these, he says the expectation that prices will keep on rising by about 10% every year has accounted for between one-third and half of the excessive rise in prices seen in the past 10 years.

"We are likely to have significant falls in real house prices once those expectations come down," he warns.

"But our simulations suggest the timing is very hard to fathom."

Answer 1

Eventually yes they will have to fall!! Prices are rising at an alarming rate, and it will get to the point where it will be difficult for many people to afford to buy their own home. As the saying goes "what goes up has to come down".

Answer 2

The one lesson that so called investors have yet to learn is when you have high profits you better know why, or then is a red flag that some one is lying. In less you have a patten for the cure to AIDS or Cancer larger profits will mean a big down fall or crash do to some dishonest business practiced.

If you look at resent past record profits like Enron,Worldcom,The S and L crash and the list goes on besides the crash they all had record profits. Check out this web site and see if the housing market in true and based in fact or is some one pulling the wool over the people eyes.
http://www.breakingbubble.com/index.htm
Needless to say there is going to be a big crash.

Answer 3

I dont see why a coalition could reason a disaster of self belief. all the events understand that they'll could desire to handle the funds deficit - whichever occasion gets in - so if there is no universal winner it's going to be thrilling to work out them having to artwork mutually which i think of will bring about extra advantageous than "boys squabbling at bathtime" it probably will bring about somebody drowning somebody. What a spectacle for the voters. a extensive funds deficit isn't stable information for any u . s . a .

Answer 4

IF THEY DROP IN PRICE JUST RIDE IT OUT.I HAVE 17 HOUSES I RENT OUT TO TENANTS SO I AM NOT LOOKING TO SELL FOR AT LEAST TEN YEARS..SO HOPEFULLY BY THEN I WILL HAVE MORE PROPERTY..AND THE PRICES WILL BE SKY HIGH BY THEN