A senior figure at Odey Asset Management has accused the government of not properly understanding the economy and insisting that a property market crash is on the cards. Crispin Odey told this week how residential property prices in the UK are now “right at the top of the cycle” and could be subject to a painful correction. In an interview with the Evening Standard, Odey said that the UK was in a depression, not a recession, and property prices needed to fall significantly before the country could begin to recover properly. The hedge fund manager predicts that property prices could fall by as much as 50%, and referred to the USA, where prices have plummeted dramatically since the global economic crash in 2008, as a country which “understood” the need for lower prices. He said: “Property is ludicrously expensive. House prices are right at the top of their cycle. I think they could crash. I am not saying it will happen immediately, but I do think they can drop by half. “House prices are not stable. They have a cycle like everything else. America has understood this much earlier than the UK. There, house prices have already fallen by 50% and they are affordable.” Odey said that the UK required a 0% interest rate and a housing boom - with credit growth fuelling a restoration of economic strength – before the country’s economy could start to see growth again.
Article courtesy of Property Investor Today