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Another UK property slump prediction from the US

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07/03/2007

Washington-based financial group the International Monetary Fund (IMF) has warned that the UK property market is “overvalued” and that we could be heading for a slump as people’s faith in homes as a saving and investment collapses.

It also predicted that rising wage settlements and increasing inflation, eating into the value of people’s saving and investment plans, could pressure the Bank of England into a fourth interest rate increase.

To add fuel to the UK’s financial fire, the IMF also criticised Gordon Brown’s handling of the economy and said that his “aggressive” tax policies were threatening the country’s economic future – a stance that will concern the Chancellor as he prepares for possibly assuming the Premiership later in the year.

But not everyone was impressed with the IMF’s analysis. “I wish I had a pound for every time I have heard an American financial group knocking our property market,” said City analyst Colin Perry.

“They are having severe problems themselves with mortgage defaults, so maybe that is colouring their opinion of the premier UK saving and investment strategy at the moment.

“They should remember that the UK has a unique property market and that our attitude to purchasing our homes is different to that, say, found in mainland Europe.”

He continued: “Property is a scarce commodity, much in demand as a saving and investment, and the general economic environment here is pretty sound. I do not place much credence, therefore, in the IMF’s prescriptions.”

 

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