Homes overvalued by 30 percent
A report published this week by the International Monetary Fund (IMF) suggests that UK homes are overvalued by 30%.
The organisation believes that the UK property market is in danger of collapse after a decade of high inflation.
The IMF’s World Economic Outlook report describes the market as having experienced one of the world’s “largest unexplained increases in house prices”.
The analysis identifies a “house price gap” which is based on the difference between the cost of a home and UK economic fundamentals, such as salaries, interest rates and population growth.
Should the market fall by 30%, the price of an average UK home (currently at £196,000) would revert to £137,000.
For homes in the South East, typically worth £400,000, the drop will be even more marked, down to around £280,000.
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