British bank warns of massive property crash
House prices in Britain could fall by up to 30% as a result of the market being flooded by buy-to-let investors, according to new research.
British Investment bank Durlacher said the growth in buy-to-let lending has caused the property market to develop a bubble.
The group said a significant proportion of mortgage borrowing in Britain was for speculative activities, resulting in buy-to-let transactions exceeding first-time buyers this year.
It warned that investors and homeowners could rush to sell their properties in a bid to catch the top of the market, leading to a crash.
The group said a crash could come even if interest rates and unemployment remain at their current levels and that the fall could be sharper than that seen during the late 1980s with prices falling for two years after they peak.
That compares with drops over five years after 1988.
It said that prices could fall by as much as 45% from their peak, and added that the UK housing market had never experienced a soft landing.
