Miles unrepentant on price crash prediction

Professor David Miles was unrepentant about the prospect that house prices could crash at an industry housing debate last week.

At the Great Housing Debate, hosted by The Wriglesworth Consultancy, delegates voted unanimously against the possibility of a future house price crash.

Panel guests Michael Coogan, director-general of the Council of Mortgage Lenders and Nigel Terrington, chief executive of Paragon Mortgages, both agreed it would take a major economic decline for house prices to fall in the foreseeable future.

However, Miles, chief economist at Morgan Stanley, stood by his view that a tumble in house prices is possible.

He says: “The destabilisation of house prices is a perfectly plausible scenario. It would be foolish to rule out the possibility that prices might fall.”

He adds: “Public expectations regarding house price growth are key to the market’s stability. Growth would need to fall for a number of months before peoples’ expectations, and therefore prices, were seriously impacted.”

In November last year, it was reported in Mortgage Strategy that Miles came under fire for his doomsday report on the on the housing market in which he said a sharp fall in house prices is likely at some point, although it could be one or two years away.

At the time, he was slated by one commentator who compared him to the gravity-fearing chief in the Asterix comic books and another who said he should get back in his box and stick to being an academic.

The CML believes that the strength of the economy and a continuing shortage in the supply of housing will ensure that the UK housing market remains solid.