house prices

The article tells us about the predictions for house prices in the near future and explains the housing market structure and the causes of falling and rising prices.
Yolande Barnes also states 2 indicators of housing-market overheating which are:

1.the house price to income ratio
in 1970-80's it was about 4:1 or 3:1, which is relatively low, comparing to recent 6:1 or 7:1

2. the cost of mortgage servicing



Moreover, Yolande Barnes talks on the nature of the recent credit crunch. An imporant point, that he emphasises in his article is the difference in roots of the US and UK downturn and, therefore, the difference in the housing markets.

'in the US as many as one home-owning household in 16 has defaulted on its mortgage or faces repossession, compared with fewer than one in 200 in Britain.' .


At the end of the article Yolande Barnes gives his opinion on what the behaviour of investors is likely to be in the near future and gives a forecast for the house prices in 2009 and 2010: 'by the end of 2009, house prices will probably have fallen 25 per cent from their peak.
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