While the U.K property market reportedly does not look promising in the near future, it now needs close monitoring.
As recently reported, it is said that analysts are in fear that the U.K property market might suddenly crash and with many foreign investors feared likely to be checking out of the London market, a "domino effect" of economic catastrophe might be triggered. Moreover according to a previous report in WJS, the real-estate in prime central London has not gone into a bubble but it doesn't look promising in the near future either. Analysts and real estate agents say that prices in prime London are expect to fall by the end of the year to a least 2 percent.
In a report rant by The Telegraph, Mark Carney has warned the European Parliament that commercial property estimates "had moved quite notably in a number of jurisdictions" thus needing close monitoring. As the Vice-Chair of the ESRB, Mr. Carney has also said that cash from foreign sources has contributed to the considerable rise in property prices. Carney though says that there are no actions necessary at this point yet, but it is important that the market is closely monitored.
"We are watching some developments, including the developments in the public-traded commercial real estate market ... to ensure that's not a potential amplification channel of financial instability," Mr. Carney reportedly said, while speaking about risks linked to publicly-traded funds.
And with respect to the risky situation posed by the commercial property sector, deputy governor for financial stability Sir Jon Cunliffe, has shared his views as well. According to the The Telegraph, he has mentioned that this is the same sectore where "historically British banks have taken large losses in downturns."
Sir Jon has also noted that property values in London were particularly for the most part overextended, latest FSR reports suggest that some prime West End Office properties are "overestimated."
