Nearly one in four Londoners believe there will be a housing crash in the next two years, according to a new YouGov survey. Despite a drop in prices in parts of the capital over recent months, 23 per cent of the city’s residents said the country is headed towards a crisis.
The survey, published by property marketplace The House Shop, asked Londoners if, and when, they believed the UK housing market would experience a crash. The results also showed that over half of Londoners believe there will be a crash within the next 5 years.
The survey found that older generations were more confident in the stability of the market, while younger generations were more likely to believe there would be a housing crisis in the near future.
Nick Marr, co-founder of TheHouseShop.com, said that the city’s soaring prices, which are out of reach for many younger residents, help explain the survey’s outcome. “It is not surprising that some young Londoners are in fact hoping for a housing crash”, said Marr. “It may seem drastic, but some see this as one of their only viable routes into home ownership!”
But while there has been a dip in London’s soaring property prices over the last 12 months, according Laith Khalaf, a senior analyst at Hargreaves Lansdown, this isn't necessarily indicative of a looming crash.
“There is a perception that what goes up must come down,” said Khalaf. “But there doesn't seem to be anything that suggests an extreme event in the London market. There are headwinds that are going to moderate growth, rather than create an all out crash.”
According to Khalaf, these forces include the relative affordability of mortgages in the UK, the near-constant demand for housing across the country, and the Bank of England, which is unlikely to do anything which would trigger a crash.
Not all Londoners are fearing the worst, however. According to the survey, only six per cent of those surveyed believed there would be a crash within the next 12 months, while just under a third said there wouldn't be a crash at any point in the future.
However, there is one factor which might destabilise the city’s housing market, according the Khalaf. “The wildcard is a negative Brexit outcome, and whether it will cast a shadow over the city of London,” he said. “But there hasn’t been a [Brexit] shock event yet. There may be one, but there is increasingly little time for it to happen.”