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Affordability low signals house price crash

Over-valuation in the housing market could herald a price crash in 2008, according to Lombard Street Research (LSR).A study conducted for The Telegraph by LSR asserts that the property market is at its most overvalued for 15 years, with house prices rising faster than salaries.The LSR Housing Affordability Index reports that affordability has seen a nose-dive of seven per cent over the last year, leading to forecasts of an impending price crash.The affordability barometer showed the lowest instance of affordability since 1991, when comparing property prices and average wages.Diana Choyleva of LSR commented: "We are now clearly at the end of the house price boom. We think there will be a correction next year, although it is unlikely to be as severe as the last crash."This affordability data is confirmed by recent statistics from the Halifax building society, which showed that an average mortgage amount has nearly doubled over the past three years.

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