Will the housing boom continue?

[terencem2]

I can't see how the housing boom can carry on. It has to crash eventually in my opinion. There is too much debt and wages are not rising in line with inflation. Somewhere something has to give, surely. Can anyone point me to more opinions and research to back up or dismiss my thoughts?

[sue11]

There has been much thought put out about this over the past few years. We seem to have been waiting for a housing crash for about the past 3 years now and it has not happened so far! I think the reasoning as to why this boom has carried on for so long, is the influx of polish/europeans which are propping up the rentals market and stopping the buy to let owners from dumping the property on the market when the rent exceeds the income and creating the start of a crash. Saying all that however, we may need to watch this space as interest rates are going up and making the rental market much less attractive! My advice for anyone thinking of buying is to be in for the long term and don't expect to turn a quick buck.
Cheers Sue

[EverClean]

Every market goes through a period of rationalisation after extensive gains. The current property market is no exception to this rule. I personally don't think it will crash, but we'll see a drop in prices - probably between 10% and 20% (altough some would see this as a crash - it will probably happen slowly)

[JamesQ]

My feeling is that the market will hold up until it begins to appear to be contracting, at which point there will be a sudden glut of properties hitting the market as people rush to unload at the peak before the value of their property falls by too much.

Which will, of course, cause the value of property to fall sharply...

Which will cause more owners to try to sell quickly...

Classic positive feedback loop - read up about tulip mania in the 1630s

Property is seriously over-valued at this time, simply because people are prepared to pay the prices - low interest rates, and a rising market powered by new investors clamouring to climb on the bandwagon have made it so. It can only last at the cost of increasing inflation, which is generally considered to be a Really Bad Thing.