Investment bank warns UK housing market set to implode

| February 22, 2008

A property expert at investment bank, Dresdner Kleinwort, has warned that the UK housing market is a “house of cards” on the verge of collapse.

In a report issued to clients at the start of the results season for UK housebuilders, Alastair Stewart implies that the UK housing market is set to implode as a result of years of reckless mortgage lending, an oversupply of new city centre flats and widespread fraud.

Mr Stewart is advising those holding stocks in housebuilding companies to take advantage of the recent rise in share prices and reallocate their investments.

He expects housebuilders’ results to show that the market is “hitting a wall”, as forward orders for new homes plummet.

Mr Stewart goes on to describe the market for new-build city centre flats, as “in line for a full-scale crash”.

Meanwhile, the Financial Services Authority is investigating over 200 cases of mortgage fraud.

Its director of financial crime, Philip Robinson, is urging the industry to take action against what appears to be a growing trend, as new allegations of mortgage fraud are being reported to the authority every week.

Only this week the FSA banned a further two mortgage brokers for submitting false applications to lenders.

However, Mr Robinson believes that individual fraud is the tip of the iceberg and that a far greater threat is being presented by organised criminals.

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