Finance Markets: Vendors lower prices to secure capital gains

Analysts at investment bank, JPMorgan, are forecasting that UK House prices will decline by 6% in 2008, and continue falling next year.

At the end of 2007, the bank was predicting that prices would remain stagnant for at least a year, but last week, Malcolm Barr, JPMorgan’s chief UK economist, described the current situation as “pretty bleak”.

Mr Barr explains: “The rapid slowing in prices, the step-up in new supply, and the marked drop in household expectations for house prices suggests the credit crisis has encouraged existing homeowners who were considering a sale to move quickly, and accept a lower price, to realise existing capital gains before they are eroded.”