Is there a rough ride ahead for an already beleaguered UK housing market?

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On Wednesday, I flagged up a Morgan Stanley (via the always brilliant FT Alphaville) call that UK house prices could fall by 10%.

Well, here's the details behind that Morgan Stanley forecast. The key points?

"The supply recovery looks likely to be relatively weak, but we think that demand will be dampened by continued weak real household disposable income growth and likely rising mortgage rates.

...

Mortgage spreads...[and]...real interest rates are also likely to be volatile. In the medium term, we think that inflation pressures will be relatively strong on average, prompting further rate rises from the bank as it tries to get inflation back to target.

However, with the real economy continuing to go through a period of transition towards being a more export- and investment-led economy and the banking sector likely undergoing significant changes too, growth and financial conditions may fluctuate more than in the pre-crisis years and increase the volatility of any interest rate path."

Good thing I just bought a house, huh? *gulp*

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