According to one research firm, the British housing market faces a “lost decade” of falling prices. The Telegraph has the scoop:
UK Housing Market Heading for ‘Lost Decade’, Warns Collins Stewart
Graham Ruddick, The Telegraph
There’s already a rather colorful debate over the forecast, with some in the banking industry calling its claims about mortgage lending suspect. To us though, those who focus on the specifics are perhaps missing the bigger picture: Very long-term forecasts are seldom accurate and rarely mean much.
Why? Two main forces will affect British home prices over the next 10 years: supply and demand. And many drivers will influence supply and demand along the way. In the near term, the success (or potential lack thereof) of the government’s efforts to increase mortgage lending will indeed impact demand. But there’s simply no predicting what other forces materialize further out. Any number of economic developments, regulatory schemes, population changes, etc. that we can’t even fathom today could arise, impacting home prices. Any time you see a very long-term forecast for anything finance-related, whether good or bad, we suggest keeping that in mind.
