House prices likely to fall 35% next autumn

Posted under General by Alan

Capital Economics, an economic forecasting agency, is predicting a 35% crash in house prices by next autumn from their last summer peak

The agency had previously forecasted a 35% fall in the prices by 2010, but the fall appeared to be much quicker in the wake of economic upheaval.

The prices are expected to remain stable for 18 months before recovering in 2011.

The fall would result in wiping off of nearly £65,000 from the average property, leading average home cost to fall to £120,000 level, which was £186,000 during property boom last summer.

The news is quite shocking for homeowners who are already facing threat of negative equity. Earlier in this week, estate agent Knight Frank had forecast that house prices would come down by 30% from high level of summer 2007and reach levels of September 2003.

According to the Standard & Poor’s credit ratings agency, 60,000 homeowners were being pushed into negative equity each month by the falling house prices.

HM Revenue & Customs (HMRC) informed that the sale of properties was down by 53% in the last 12 months. It reported only 59,000 homes were sold in September 2008 against 126,000 in September 2007.

According to Moneyfacts, repossessions were likely to increase since lenders were not prepared to reduce mortgage rates.

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