UK housing's bust without a boom

Synopsis

In the UK housing market, prices are rising despite stagnant wages, prompting discussions about a potential housing bubble. Kevin Daly, a senior European Economist at Goldman Sachs, argues that houses are undervalued. He notes that a year ago, outside of London, house prices were stagnant, but they have since increased by around 10% over the past 12 to 15 months. Housing transactions have surged by 30%, driven by improved mortgage availability. However, the supply of housing remains low, with completions at their lowest since the 1920s, which Daly believes contributes to the undervaluation of house prices. He emphasizes that the lack of housing supply is a critical factor in the current market dynamics.