British Houses Still aren’t Cheap Enough
2011-6-7 16:11:05 Joycommunications.Biz
The first problem facing Britain’s housing market is quite simple. It’s still not ‘cheap’ – far from it. Although prices have fallen by 11% from their 2007 peaks, according to Nationwide (Halifax put it at 20%), they still look too high.
“Valuations still look somewhat stretched”, says a new report from Morgan Stanley’s European research team. They reckon the UK’s house prices overall are overvalued by “approximately 15-25%”.
Some argue that current interest rates justify house prices being higher. The lower rates are, the more you can afford to pay for a property, without your monthly payment stretching you too far. This is the ‘affordability’ argument.