Next two years could see house prices nosedive
A recent report has suggested that house prices in the UK could fall by around one third by 2010, which would mean that within a couple of years many homeowners could see thousands of pounds wiped off the value of their homes. Officials from Deloitte recently released the report indicating that house prices could nosedive in the UK, and an official from the group said: ‘We now expect UK house prices to fall by about a third by the end of 2010 with severe adverse effects on household spending and investment.’
The group also said that the falling pound could help restore some sort of stability eventually by helping exporters, but added: ‘The lower pound will not prevent the economy from slowing sharply as steep falls in house prices, a squeeze on real incomes and the credit crunch hit domestic demand.’
He also added that fears over rising inflation could mean that interest rates will not fall further, stating: ‘What’s more, the lower pound could exacerbate the downturn if it were to prompt a more sustained rise in inflation, preventing the Bank’s Monetary Policy Committee from cutting interest rates aggressively.’
One official added: ‘Import price inflation is already at a 15-year high. All of this is seriously bad news for the housing market. Eventually, inflation concerns will ease and interest rates will fall sharply. But by then it will be too late to prevent the economy from entering a deep downturn.’
Over the past few months the value of homes in the UK has dropped for a number of consecutive months, and house sales have also plummeted amongst tighter credit conditions and the fact that many buyers are too wary to take the plunge because of falling house prices.
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