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Maybe a house price crash is just what our society needs

City Comment: Perhaps this shock to the market is overdue

<p>Is a house price crash inevitable? (Rui Vieira/PA)</p>

Is a house price crash inevitable? (Rui Vieira/PA)

/ PA Archive
Simon EnglishFinancial Editor
21 June 2023

f you believe what you read, a house price crash is now inevitable.

You can see why some experts say that, and not just because they like seeing their name in newspapers.

Inflation is stubborn, perhaps even baked in. Which means rates have to rise, perhaps to 6% by the end of this year.

Those with the misfortune to be renegotiating mortgage deals soon will see huge hikes in monthly repayments, sucking billions of pounds from an economy already toying with recession.

There’s no denying that all of this is bad, but in terms of houses, individual woes aside, it may be manageable.

In the medium term the biggest issue here will be employment. If people keep their jobs, they don’t default on mortgages very much. When they do, banks have become kinder, more efficient at finding breathing room.

Mortgage brokers say there are many better deals still available than the headlines suggest.

Folk unsure last year whether to pay down mortgages or use spare cash for something else are now clear about the best course of action.

So the stock of mortgage debt may fall, even if monthly repayments are higher.

Perhaps this shock to the market is overdue. Perhaps we can edge to a society where in order to buy a house you don’t have to bet the farm, have to borrow to the edge of your ability, just because everyone else is doing so.

If we came out the other side of all this with a more sensible view of what bricks and mortar are worth and how much are lives should be dominated by “owning” a home, that might be for the best.

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