Newspaper article The Journal (Newcastle, England)

Property Prices Could Drop Further, Bank Says

Newspaper article The Journal (Newcastle, England)

Property Prices Could Drop Further, Bank Says

Article excerpt

Property prices are more likely to fall than rise in the next few months, a member of the Bank of England Monetary Policy Committee said yesterday.

In a speech to the Institute of Economic Affairs, Kate Barker also said the slide in the value of the dollar may have overtaken house prices as the most important issue facing the committee.

"In view of the evidence on affordability, and the balance of arguments over over-valuation, the likelihood of some decline in house prices, at least relative to earnings, seems now to be much greater than that of a significant increase."

Her words will offer little comfort for many within the industry who were hoping the new year would see a halt to the declining market of the last few months. Instead, Ms Barker observed: "Past experience suggests that house price movements in one direction over a quarter are more often than not followed by a further change in the same direction."

But it remains unclear if the level of UK house prices is at or above equilibrium today and, if above, how far, she said. …

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