Tuesday, December 18, 2007
Forecasts correction of 10% in house prices
The prime reason for a slump was an expected fall in house prices, which, according to Halifax, have now fallen consecutively for the past three months. "The last time the Halifax house price index was dropping like this was back in 1995, when the housing market was just getting going after the last crash," said Mr Owen. "I'm no longer comfortable with this view that the housing market can just tread water for a few years. What's much more likely is that there will be outright falls in house prices - probably of 5pc-10pc." He said that there had been four major peaks in house prices and affordability in the post-war period - the late 1940s, 1973, 1989 and, now 2007. "After each of the first three peaks in this post-war period, values dropped by 30pc in real terms.