20% fall in house prices say Capital Economics
Posted by hasnain on 13 July, 2008
Capital Economics, the macroeconomic research consultancy, believes property prices could fall by up to 8% this year.
The organisation then predicts a 10% fall in 2009. Added to the fall in property prices during the final months of last year, means prices will end approximately 20% lower than their 2007 high.
The predictions in property price falls are revised due to the long lags in the house buying process, house price data based on mortgage approvals reflect decisions made several weeks, or even months, earlier, according to Ed Stansfield, property economist at Capital Economics.
The data will not yet be fully reflecting the impact of the tightening in lending standards that we have seen this year, nor the recent falls in consumer confidence, added Mr Stansfield.
Last week, analysts at US investment bank Morgan Stanley, predicted that property prices will fall by 10% this year and 5% in 2009.
Furthermore, Neil Woodford of investment house Invesco Perpetual, said property prices across the UK will fall 8% to 10% this year.
Halifax and Nationwide have both reported falls in property values, while the Royal Institution of Chartered Surveyors (Rics) said confidence in the property market is at a record low.
