LONDON (Reuters) - British property prices are not about to fall sharply despite fears over rising interest rates, the chairman of the Bank of England’s property advisory forum said on Tuesday.
The central bank has hiked rates four times since August and is widely expected to lift them again next month, raising concerns that the robust housing market could falter due to constraints on affordability, rising debt and insolvencies.
“Everyone assumes base rates going up has got to be bad for the housing market — and of course it is — but there are broader issues,” said Credit Suisse European real estate investment banker Ian Marcus at the Reuters Real Estate Summit in London.
Marcus also chairs the BoE’s Property Forum, which advises the central bank on conditions in the market.
“Affordability and employment, which are long-term drivers, are at long-term averages, demographics are in favor and supply/demand is out of kilter, so I remain as confident as I can be that I don’t think residential prices are going to plummet in any shape or form.”
Surveys have shown that mortgage approvals — an indicator of future house prices — have eased in recent months but that price inflation has remained firm.
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