Mann International have reiterated their standing advice to UK clients to avoid committing to property purchases unless absolutely necessary.
The warning comes as Land Registry figures showing home values in England and Wales rose 8.5% from a year earlier were touted as signs of a sustainable recovery in the UKs property market by property consultants and realtors.
Mann International told clients that the optimism being demonstrated by vested interests was irrational and took no account whatsoever of the fact that Britain was about to face the most crippling austerity in decades as the new coalition government attempts to reduce the burgeoning national debt which, at 12.1%, is the highest among the G7 nations.
The firm believes that the sovereign debt crisis in Europe could quite easily lead to another credit crunch as banks prepare for increased mortgage arrears and delinquencies that the austerity measures will inevitably cause.
Shortage of supply has been widely acknowledged as the reason for the higher prices as many sellers opted to wait before listing their properties. One of the Mann International analysts said that the increases cited in the Land Registry figures would undoubtedly tempt sellers to put their properties on the market thereby increasing supply and driving down prices.
There are far too many headwinds facing the market in the short to medium-term for buyers to take the claims from vested interests seriously, said the analyst before suggesting that prices were likely to fall another 20% before bottoming out.