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A 20pc house price fall would shatter dreams of supply fix

Richard Curran


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Warning: Davy Stockbrokers has suggested house prices could fall as much as 20pc

Warning: Davy Stockbrokers has suggested house prices could fall as much as 20pc

Warning: Davy Stockbrokers has suggested house prices could fall as much as 20pc

Most people will have more on their minds right now than a possible 20pc fall in house prices. There was a time when even a hint that house prices might fall by a single percentage point brought out fear and loathing. This time, everything really is different. An assessment by Davy Stockbrokers that house prices could fall by as much as 20pc seems perfectly logical based on how the market is valuing developer company shares.

The differences with previous house price drops are stark. Many people who bought houses in the last few years did so with an 80pc to 85pc loan-to-value mortgage - not 100pc or 110pc.

Hundreds of thousands of people have seen the value of their homes climb in recent years, which has taken them out of negative equity. If they are not planning or hoping to move any time soon, a 20pc drop won't be such a big problem. The big negative from a house price fall is the impact it will have on future housing supply. It isn't so much bad news for homeowners, as those who are homeless, paying exorbitant rents or simply hoping to buy a home.