House prices to drop up to 5% - L&G

Financial economist Andrew Clare says despite the multiple of six times national average earnings paid for housing it is not the case prices will necessarily collapse. That is because expectations of those in the market are not factoring in a risk-premium related to unemployment, following a decade of constant growth in the UK economy. This means current high prices will continue to find support from people in the market for a place to live, who generally are not afraid they will have to go through a period of unemployment anytime in the next few years. Additionally, any price fall...