House prices set for 'slow motion' crash

Economist and investment manager David Kauders has warned the UK is set for a crash so slow that many will not even see it coming.

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, the Daily Mail reports.

Now, he said, we have reached 'system limit'. The supply of credit cannot grow further, but instead will start to dwindle and continue to shrink for decades.

'There will be small rallies, as we see today, where lending appears to be reviving,' according to Kauders.

'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," he said.