House Prices Fall Further In 2011

According to telegraph, house prices are expected to fall further in the New Year as banks maintain a tight rein on mortgages amid government austerity measures, economists claim. Experts predict that property values will plunge by 5 to 10 per cent in 2011 following a period of declining prices since the summer.

Of 56 economists polled by the Financial Times, 50 said they expected house prices to continue falling next year, compared to just six who thought they would rise.

Ian McCafferty, chief economist of the CBI employers’ body, told the newspaper: "Traditionally, in the absence of distress selling, the UK housing market adjusts more through volumes than prices, so prices are likely to slip rather than plummet next year."

From their peak in 2007, British property prices plummeted by 20 per cent to a trough in 2009 but have subsequently recovered around half that figure.

He said sales would remain depressed by tight mortgage conditions, high prices relative to earnings and fragile consumer confidence.

Some economists said housing market weakness would undermine the economy. Mike Dicks, of Barclays Wealth, said: "Debt deflation can kill off a recovery, or keep it from gathering strength in the normal fashion."

Overall, it is said house prices had fallen by 1.6 per cent during 2010, with property values ending the year at a lower level than they started it in 71 per cent of England and Wales.

The group expects house prices to fall by 2 per cent during 2011, due to weak demand and the ongoing problems in the mortgage market.

Two easy ways to get a no obligation offer for your property.