20% house price drop predicted by experts

08/08/2008

The value of the average UK property is to decline sharply in months to come, experts have suggested.

A new poll from news agency Reuters, which called together housing market experts from banks and research institutions, found that an overall 20 per cent decline in house prices from last year's high was expected - although some predicted a drop of 35 per cent.

This would plunge millions of people into negative equity - with the value of their mortgage exceeding the value of their home.

"We think that in most respects the UK is undergoing a US-style housing correction," said David Page, an economist at Investec and a participant in the survey.

"The lack of mortgage funding increases the danger of an over-correction in prices beyond what is required to bring buyer affordability in line," Miles Shipside at Rightmove added.

News of the poll follows the release of house price figures for July from Halifax, which showed that the value of property had eroded by 8.8 per cent over the last 12 months.

Tags; Housing Debt and Bills,

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