MPC Member - UK house prices could fall by one third

Permalink: MPC Member - UK house prices could fall by one third
by Kay Murchie

In a speech on Tuesday night to the Royal Society in Edinburgh, a member of the Bank of England’s Monetary Policy Committee, Mr David Blanchflower, said average property prices in the UK could fall by 33%.

His prediction is in line with the International Monetary Fund (IMF), who recently said that property in the UK is overvalued by 30%.

Mr Blanchflower warned that the credit crunch was now hitting the UK hard and the UK faces the real threat of recession. He said action is required to prevent this from occurring.

In my view a correction of approximately one third in house prices does not seem implausible in the UK over a period of two or three years if house price to-earnings ratios are to be restored to more sustainable levels, said Mr Blanchflower.

Yesterday, the Nationwide said that UK property prices are lower than they were a year ago.

Prices dropped by 1.1% in April, the sixth consecutive monthly fall, and were down 1% from the levels seen compared with April last year according to the Nationwide. The fall represented the first for over a decade.