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“Sun Worldwide” analysts are thought to believe that media reports suggesting that the UK property market is in the throes of a full-fledged recovery are demonstrating shocking irresponsibility.
The Asian-based investment broker points to severely depressed transaction levels as an indicator that there is a shortage of inventory on the market.
They also suggested that as prices rise in the short term, it is likely that more potential vendors will place their properties on the market. This is likely to create an excess of supply without a corresponding increase in demand amongst potential buyers which will inevitably see a resumption of price declines that has seen the average house price fall by some 25% since reaching a peak in January 2007.
“Sun Worldwide” analysts believe that UK house prices are set to fall by another 30% before leveling off.
“Sun Worldwide” has continually advised its UK clients to avoid making speculative forays into the property market. They justify their caution on the basis that unemployment is set to increase and also point to pressures being exerted upon gilts as Britain continues to raise unprecedented sums in the bond markets.
The firm is convinced that investors will force the treasury to increase yields on long dated gilts in order to compensate for the additional risk of holding UK sovereign debt. This is likely to force up long-term interest rates elsewhere in the market place and increase interest rates which will undoubtedly have a severe impact on mortgage holders.
“Sun Worldwide” has advised its UK clients with mortgages seek to tie in to a long-term fixed rate for a minimum of three years in preparation for the inevitable interest rate hikes that will be forced upon the Bank of England.
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