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UK house prices will fall further, say two reports

UK house prices will fall further, say two reports

House prices in Britain will continue to plunge over the coming year as the economy deteriorates, two leading housing reports said Monday.
Average house prices will be 25 percent _ or 50,000 pounds ($77,000) _ cheaper by the end of 2009 than they were in the peak autumn 2007 market, the Centre for Economics and Business Research predicted. That would put prices back five years, to the level they were in 2004.
A separate study by Hometrack Ltd. said that house prices fell at their fastest rate in at least seven years this month, setting current prices back at the level they were in 2006. Hometrack also predicted that home values would continue dropping in the coming months.
The average cost of a residential property in England and Wales fell 7.3 percent from a year earlier to 163,200 pounds ($253,000), Hometrack's national housing survey showed. The annual drop is the largest Hometrack has recorded since it launched the survey in 2001.
The hardest hit region was London, where prices plunged 8.6 percent during the past year.
Richard Donnell, director of research at Hometrack, said the housing market would get worse as the country's economy contracts in the coming year.
"The expectation of a forthcoming recession and rising unemployment will further undermine demand for housing and continued price falls are inevitable in the months ahead," said Donnell.
Britain's housing market _ which enjoyed a doubling of average house prices over the last decade _ is crashing as a result of the country's economic downturn and the global financial crisis, which has seen mortgage lending dry up and unemployment rise.
"Confidence in the housing market has been shattered as lack of mortgage availability has left few sellers chasing even fewer buyers, and expectations of falling prices have become embedded," said Ben Read, managing economist at the Centre for Economics and Business Research.
Official data released on Friday showed that the economy shrank for the first time in 16 years between July and September, contracting by a greater-than-expected 0.5 percent. Prime Minister Gordon Brown has warned that the country is likely heading into a recession.


Updated : 2021-05-13 14:23 GMT+08:00