Could property prices be forming a bubble?

Wednesday, 11 August 2021 04:27

An analysis by the bank UBS suggests property prices are rising too fast -and there could be a sudden correction.

House prices are rising, but at the same time rents are falling.

UBS says the cost of residential property is up 5.4% - the largest increase in eight years - but that’s not being matched by a rise in incomes.

Before the pandemic the average cost of a house was 6.5 times annual salary – now it’s 7.1 times.

But conversely rents are down over 3% - that’s the steepest drop since 1996.

The signs the prices are in a bubble, the bank says many purchase decisions are being made in the belief prices are going to continue to rise.

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