Proposals to boost mortgage lending from the Coalition could backfire and leave first-time buyers in negative equity as house prices fall, according to research from Collins Stewart, in part using its Quest model.
“UK housing could be stuck in a lost decade, with tight lending putting pressure on prices and record low volumes,” analyst Alastair Stewart said.
Mr Stewart, who put a 0p target price on housebuilders Taylor Wimpey and Barratt Developments following the collapse of Lehman Brothers, warned of “at least two or three years of steady house price erosion”.
Mr Stewart said one of the main reasons for the prediction of falling prices is that the “decades old near-mantra” that there is a structural shortage of housing in the UK is based on “flimsy evidence”.
Politicians and industry leaders have claimed the UK is building only half of the 240,000 homes it needs every year.
However, the Collins Stewart research claims the UK has been building double the rate of population growth for 20 years and is in line with the main European countries. It says 11,000 “hidden” homes are built every year that are not officially recorded in construction figures but are picked up by tax authorities.
“We believe that periods of rampant house price inflation have more often been caused by over-supply of capital rather than under-supply of housing – the northern buy-to-let boom of the last decade being a prime example,” Mr Stewart added.
Source: UK housing market heading for 'lost decade', warns Collins Stewart - Telegraph
“UK housing could be stuck in a lost decade, with tight lending putting pressure on prices and record low volumes,” analyst Alastair Stewart said.
Mr Stewart, who put a 0p target price on housebuilders Taylor Wimpey and Barratt Developments following the collapse of Lehman Brothers, warned of “at least two or three years of steady house price erosion”.
Mr Stewart said one of the main reasons for the prediction of falling prices is that the “decades old near-mantra” that there is a structural shortage of housing in the UK is based on “flimsy evidence”.
Politicians and industry leaders have claimed the UK is building only half of the 240,000 homes it needs every year.
However, the Collins Stewart research claims the UK has been building double the rate of population growth for 20 years and is in line with the main European countries. It says 11,000 “hidden” homes are built every year that are not officially recorded in construction figures but are picked up by tax authorities.
“We believe that periods of rampant house price inflation have more often been caused by over-supply of capital rather than under-supply of housing – the northern buy-to-let boom of the last decade being a prime example,” Mr Stewart added.
Source: UK housing market heading for 'lost decade', warns Collins Stewart - Telegraph
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