City pundits warned last week that the housing market is heading for meltdown with forecasts of a drop in house prices ranging between 15% and 30%.
The first to pitch in was fund manager Tony Dye, chief executive of Dye Asset Management. Nicknamed 'Dr Doom' for his accurate prediction of the end of the dotcom bubble, Dye says he expects a fall of 30% and dismisses claims that the market will experience a soft landing.
Dye says: “Homes are expensive relative to people's incomes. People at the bottom of the ladder are almost precluded from buying.”
Goldman Sachs also forecasts a downturn of between 10% and 15%, saying the over- valued market is vulnerable to a fall.
The net result has been a drop in the share values of many housebuilding firms.
But the comments have met with widespread scepticism from professionals with many believing they are publicity-seeking.
Tom Bland, associate at Savills, says: “If anyone is drawing a parallel between the market now and that before the crash in 1989, they are way out of sync.”
And Brian Thorn, economic consultant at The Wriglesworth Consultancy, says:
“There is such a strong desire among the public to buy homes that the long-term trend will remain upward.”