A leading economist and industry expert has predicted that house prices in the UK could fall by as much as 20% over the next two years, which would take the average house price to £160,000 from £200,000. The bold but gloomy prediction has been made by Professor David Miles, who is a senior economic adviser and Morgan Stanley and was a former advisor to the government. If his prediction comes true then many homeowners in the UK could find themselves facing problems.
Whilst homeowners across the UK will not be happy about the latest prediction relating to house price falls, industry professionals have stated that not everyone will be unhappy – first time buyers, for instance, who have not been able to afford to get onto the property ladder since property prices boomed, will now be able to consider purchasing if house prices fall to a low enough level. This move would allow easier access to mortgage loans.
Professor Miles also spoke about the situation, stating that whilst homeowner could be seriously affected there were those that could benefit from the situation. He said: 'I am at the pessimistic end of the spectrum, but I don't think it should be seen as the pessimistic end because there are as many gainers as losers.'
In addition to predictions such as the one made by Professor Miles, recent reports have also shown that many homeowners that are trying to sell their homes are having to accept offers that are way below asking price in some cases, as buyers are too wary about paying too much for a property that could plummet in value very quickly. This situation has increased the use of credit cards that then add to the problem of bad debts. Many homes have been stuck on estate agents' books for some time as a result of this reluctance to buy, as well as due to tighter lending conditions.
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