'Worst of UK house price fall over'

The worst of the UK house price falls were over

A Bank of England policymaker and mortgage market expert told MPs that he believed the worst of the UK house price falls were over.

Professor David Miles - author of a Government-commissioned report on the mortgage market in 2003 and 2004 - offered more hope for the embattled property sector after Nationwide on Wednesday revealed that prices rose in June for the third time in four months.

The new member of the interest rate-setting Monetary Policy Committee said in a Treasury Select Committee hearing on his appointment that the market may have reached the bottom.

"Expectations are crucial in the housing market and they look a bit better now than a few months ago," he said.

"My hunch - and I put it no stronger than that - is that we have seen most of the overall aggregate house price falls."

His Miles Review sent out an early warning that the focus in the mortgage market was not long term enough, cautioning that borrowers were fixated on short-term deals which left them exposed to interest rate payment shocks.

He reiterated to MPs that he also said in 2005 and 2006 that house prices were over-valued by around 20% to 25%.

The former Morgan Stanley economist said the mortgage market had undergone a shift change since the credit crunch, although he said it had not been entirely unwelcome.

"High loan-to-value mortgage products have dried up - ultimately that is not a disaster; people will wait a bit longer to buy and rent a bit longer," he said.

He added: "The flow of first-time buyers will be reduced as they accumulate higher deposits."