David Kauders house price prediction: 'We're set for a crash so slow that many will not even see it' | Mail Online

David Kauders house price prediction: 'We're set for a crash so slow that many will not even see it' | Mail Online

Some like property because it is a solid, visible asset, but David Kauders, a respected economist, investment manager and author, is not among them.

The downturn he describes in his book, The Greatest Crash (£12.99, Sparkling Books), has, he believes, barely begun, notwithstanding the credit crunch and global recession of the past three years.

Kauders thinks house prices rose from the Seventies onwards mainly because the flow of fresh mortgage lending into the system grew more or less uninterruptedly.
Now, he says, we have reached 'system limit'. The supply of credit cannot grow further, but instead will start to dwindle and continue to to shrink for decades.

'There will be small rallies, as we see today, where lending appears to be reviving,' he says. 'But these periods will be followed by greater mortgage contraction. And each time, the value of property will fall, reaching a new, lower level. It will be a slow-motion crash - so slow that many commentators will not even see it. They will observe only the shorter-term trends.'