“House prices have broken free from reality and defied gravity for far too long, but they are an asset like anything else, and there are six clear reasons a nasty correction looms in the coming year.
Global asset price crash
Asset prices around the world soared as central bankers embarked on the greatest money printing experiment in history. While much of that money flowed into the stock market, a great deal also found its way into house prices. What we are now witnessing on trading screens around the world is the unwinding of the era of monetary excess, and house prices will not escape the fallout.
… There is a delayed effect on property prices because the market is so inefficient.
Transactions can take up to three months to complete and the property itself may have to languish on the market for even longer. The prices are also dictated by estate agents, who have an interest in inflating them to raise fees. The number of transactions is also still about 40pc below that of 2006 and 2007, which allows prices to stray from the fundamentals for a longer period.”
http://www.telegraph.co.uk/finance/property/house-prices/12087971/UK-house-price-to-crash-as-global-asset-prices-unravel.html
The article goes on to cite other factors which could lead to a price crash: changes to the buy to let market, fewer international buyers, possible interest rate rises and a massive increase in household debt
East Devon Watch 