Correction Expected within UK Housing Market
In recent months housing prices within the UK housing market have remained on a path to new heights. Although many believe growth is not close to reaching its conclusion, a matching number close to the market see a correction coming. One of those is the finance leader of the Grosvenor Group, Nicholas Scarles. The level of correction is unknown at this time, but some are already beginning the process of selling off property.
Scarles commented on the possibility of a correction, saying: "The balance of probability has increased quite dramatically that there is going to be a correction of some kind.”
Grosvenor owns a stable of commercial as well as residential property worth more than £6.5bn. Scarles believes several properties located in prime London areas are overvalued. Rumors of Grosvenor selling off some of its property are now circulating.
Asking prices for residential property are now entering a temperamental phase. Areas such as Chelsea and Kensington are among some of the first to see prices fall. Islington is an area which is seeing the opposite effect and is seeing quickly rising prices.
Low interest rates hanging in the air for years is one of the biggest reasons for the boom in recent years, along with massive shortage in the number of properties available for purchase.
A report completed by Capital Economics during the first of this year outlines the correction, saying: "On balance, the market again seems ripe for a correction.”
It continued: "Yet unless the economy lapses back into recession, or interest rates rise much further and faster than seems plausible, the early stages of any adjustment are most likely to occur in real terms, with house prices rising more slowly than incomes."