Unsurprisingly, there was little in the way of positive news in today’s Financial Stability Report (FSR) for the residential and commercial property markets. From a property perspective, the Bank echoed our view that we are witnessing a structural, not a temporary, shift in the lending environment. There will be no return to the relaxed lending practices of recent years any time soon. This strengthens the case for expecting substantial further falls in commercial and residential property prices and, in our view, reduces the potential for a subsequent sharp recovery.
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