Home Breaking News Housing market overvalued across the UK, claims ratin…

Housing market overvalued across the UK, claims ratin…

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The mainstream UK housing market is overvalued by up to 20 per cent and the London market overvalued by as much as 50 per cent according to a global ratings agency.

S&P Global Ratings, part of S&P Global, says the overvaluation comes from an increasing disconnect between current property prices and the long term income of residents. 

Alastair Bigley, a researcher for the agency, warned that prices were likely to fall.

“A combination of low rates, the stamp duty holiday and excess savings amid the pandemic have driven property prices higher, particularly in London and the South East where overvaluation relative to income over the long-term is as much as 50 per cent” he says. 

“We expect a greater correction in property prices in an overvalued market.”

In his market commentary Bigley says that sharp house price rises were “a consistent trend” in the UK and several other countries in Europe during the pandemic.

Meanwhile another housing market forecast suggests prices will rise rather than fall.

 

Reallymoving, analysing data from over 15,000 conveyancing quote  submissions, says the average property price is set to rise sharply this spring to new record of £352,984. 

It says annual price growth will hit 11.9 per cent in May.

Reallymoving uses the purchase prices that buyers have agreed to pay when they search for conveyancing quotes – this information comes through up to three months before completion.

Rob Houghton, chief executive of Reallymoving, comments: “Last month we saw some early signs that the market may be beginning to slow but the latest data shows prices rising sharply in May based on activity in February, suggesting that for now the housing market will continue to defy expectations.

“We’re seeing a clash of post-pandemic driven buyer demand and a cost-of-living crisis which is only now really beginning to bite, and as yet it remains a seller’s market and the supply-demand imbalance is continuing to push up prices.

“It’s too early to assess the impact on consumer sentiment from the war in Ukraine and if uncertainty grows and prices rises become more painful, I expect we’ll see the tables begin to turn.”

And he warns prospective buyers waiting for the market to turn: “Many will be tempted to hold out for price falls but our advice would always be to move when you have all your ducks in a row in terms of raising a deposit, securing a mortgage and finding the right home to buy at a price you can afford.”

https://www.estateagenttoday.co.uk/breaking-news/2022/3/housing-market-overvalued-across-the-uk-claims-ratings-agency