UK property 'overvalued by 20%'


Tue 31st Jul, 10:35:33 BST

House prices in the UK are overvalued by at least 20 per cent in comparison to their long term average, the credit rating agency Fitch has claimed.

In a study of 16 of the world's developed economies undertaken by the firm, the UK's house prices were found to be the second most overvalued, with France taking the first spot.

This disparity between the rate of house growth and the growth of average income means that the property market is vulnerable to economic shock, the report concluded, placing the UK third on its "overall vulnerability index" behind Denmark and New Zealand.

Despite the concerns, total mortgage lending rose by £9.6 billion in June in comparison to £8.7 billion during the previous month.

According to the latest figures released by Hometrack, the recent increases in the rate of interest has led to UK house prices growing at the slowest rate since January 2006 during July, with the average home now costing £176,300.

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