Property prices could plummet by 20% during the next two years, claims one of the UK’s top economists.
David Miles, chief economist at Morgan Stanley, made the prediction at today’s Great Housing Market Debate, hosted by the Wriglesworth Consultancy, in London.
Leading figures from across the property market attended the event and the vast majority predicted property prices to plunge.
But Miles says: “Any housing market correction will not impinge on the wider economy. GDP growth is expected to increase by 1% to 2% in the next year and although unemployment levels may rise, it would not be by much. I am not anticipating a recession in the UK.”
Miles Shipside, commercial director of Rightmove, says: “There is a large gap between sellers’ expectations and buyers’ ability to pay. The market needs to openly accept a 10% reduction in house prices to achieve an orderly correction to affordability.”
A drop in house sales so far this year was raised during the debate.
Richard Donnell, director of research of Hometrack, says: “Transaction levels keep going down and at the current level, home owners on average would be moving every 20 years.”
Several of the panellists also stressed that any house price correction could help first-time buyers back to the market.
From the 150 delegates of lenders, economists, estate agents, brokers and property investors, only Stuart Law, chief executive of Assetz, believes that house prices will rise this year.
He believes they will increase by 5%.
He says: “The dire shortage of housing stock in the UK will spike up rents and keep prices afloat.”