Property prices 'to fall by 10% over next 6 months'

An expert has said that the cost of houses in the UK will go down by ten per cent in the next six months.

People seeking home credit deals in the near future may be pleased to hear one expert's opinion on the direction of the mortgage and property market in the coming months.

According to Paul Holmes, chief executive officer of Firstrung, the price of houses - along with products such as tracker mortgages - could fall by as much as ten per cent between now and March 2011.

Mr Holmes believes that costs in this sector "exploded" prior to the recession solely due to the widespread availability of cheap credit from financiers, but this trend has now reversed as credit is no longer cost-effective, despite the fact that interest rates are at 0.5 per cent.

The expert described this as a "perfect storm" in the market, before asserting that a reduction in price across all estate agents is inevitable over the duration of the next six months or so.

His comments came after the publication of data yesterday (September 27th) by Hometrack, which stated that the cost of houses across all regions in the UK has fallen for the first time since April 2009.

This data reveals that demand for accomodation in Britain has reduced by 2.9 per cent so far in September, which represents the third month in succession that this trend has been seen.

In a continuation of this theme, the volume of buyers registering with agents has dropped by 6.5 per cent, while the supply of residential properties nationwide has also risen at a slower rate than in previous months.

Meanwhile, Mark Hayward, vice president of the National Association of Estate Agents, remarked recently that predictions from analysts and the public of house prices being reduced puts the market at risk of becoming a "self-fulfilling prophecy".

Mr Holmes concluded that the long-term future of the sector is dependent upon whether the Bank of England steps in to raise interest rates in order to prevent inflation "getting out of control".

Property prices 'to fall by 10% over next 6 months'

By: Sam Gooch

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