Experts Suggest England’s House Price Boom To End
Both analysts and estate agents see an end to current house price rises coming.
Estate agents warn they “believe the nation has now neared the limit in terms of price rises”, according to Paul Smith, chief executive at Haart.
Mike Prew, equity analyst at investment bank Jefferies, predicts “this slowdown could morph into a period of sustained house price deflation”. He added, “the balance of surveyors expecting higher house prices 12 months ahead has also collapsed, suggesting more than just short-term factors.”
What Are Their Opinions Based On?
Mr Prew points to data from the Royal Institution of Chartered Surveyors showing that in April, inquiries into buying properties fell at the second-highest rate since 2008, a statistic that indicates a price fall around a year later.
As Richard Donnell, director of research at Hometrack, an analysis firm explains, “when sales volumes fall back, it is agents that start to re-price the market to get volumes back, in a process that takes 6 to 12 months”, “they let vendors know that they need to be more realistic if they want to sell, taking on new instructions at lower prices.” Buyers notice this and as buying agent Henry Pryor asks, “how do you persuade people to buy something today that they think will be cheaper tomorrow?”
When Will It Happen?
To Lucian Cook, director of residential research at estate agency Savills, “we are clearly hitting some affordability ceilings in London.” However, “it is difficult to see what the catalyst would be for a significant correction in the housing market”.
Many analysts are holding back from publishing house price forecasts until after the referendum.
How Severe Will It Be?
Savills predicts only a mild correction to their position late last year that “mainstream” U.K. markets would rise 5% this year and 17% by 2020.
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