Paul Cheshire, a former housing adviser to the ruling Conservative Party in England and a professor of economics at London’s Economics, has made important statements about housing prices.

Professor Cheshire explained that house prices are on the verge of entering a bad process as early as the early 1990s.

Professor of economics Paul Cheshire explained that they expected most probably the prices to decline in approximately 40% range, and added that signs indicate that we will return to Negative Equity, which means that the value of the house is less than the mortgage value and which caused to one million people in the 1990s were affected.

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“We see the sings which indicate that an important regulation will be made about home prices. As we have seen in the past, trends are always starting from London and spreading to the rest of the country. And we see that home prices in the capital are increasing at a slower rate than other parts of the country,” Professor Cheshire said.

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Decrease in income will affect home prices, too

Reminding that the house prices have fallen by 37% over the next 6 years from 1989, Prof. Cheshire pointed out that unless parallel with inflation, the decrease in income will cause housing prices to fall. Last month, inflation increased by 2.9%, while revenues increased only by 2.1%.

It is emphasized that the increase in the stamp tax will adversely affect the housing market, too.