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Flat prices now trailing houses

Posted by: katalysis

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So wrote the BBC Economics Editor Evan Davis when looking at the latest Land Registry figures. These suggest that flats in some parts of the country are now losing value. Over supply is one issue but is not the whole answer. Indeed, Davis suggests that the market in flats may simply be experiencing an earlier or more pronounced cycle than the rest of the property market. Of course the concept of a cycle may be hard to grasp for a generation used to cheap credit and an ever accelerating housing market but the fact remains that the market is a two way street. Prices can go down as well as up. A correction is bound to happen sooner or later. The problem is in predicting when and by how much. If flats provide an example of the supply side of the equation then interest rates impact on demand. The recent rises mean that the cost of servicing debt is now at record levels and the Bank of England may yet have another rate rise up its sleeve. If cheap credit has been the driver for a decade of accelerating house prices then those days would appear to be over.
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