Next two years could see house prices fall

According to a recent report house prices in the UK could plummet over the next couple of years, and in addition to wiping thousands of pounds off each homeowner’s property this could also leave many homeowners facing negative equity, where they owe more on their property by way of a mortgage than the property is worth.

The information comes from the group Deloitte, and officials from the group state that house prices could fall by around one third by the end of 2010. One official 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.’

He also commented on inflation levels stating: ‘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.’

The housing market downturn has seen a sharp drop in the sale of properties in the UK, with many people being unable to get mortgages to purchase homes, which has also resulted in a cut in the number of new homes that are being built.