Bank of England governor Mervyn King has warned house prices are in serious danger of falling while home owners will almost certainly face higher than expected borrowing costs.
The statement, carried in today’s FT suggests house prices will start to slide because “it is clear that the chances of falls in house prices are greater than they were,” according to Kind’s own words. In particular, price to earnings ratios are “well above what most people would regard as sustainable in the long term.” The Times says King’s view has met with a “more sanguine” view from government quarters, where the view is “experience of the Netherlands and Australia, which, after steep and sustained price rises, later returned to more gentle trends without a property crash.” The...
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