Experts warn housing slowdown could last 4 years

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by Kay Murchie

A panel of experts have warned that it could take 4 years for property prices to rise above their highest point of 2007.

The warning comes from the majority of the 225 members of the Society of Business Economists (SBE). 53% of members think house prices will fall 6-10% this year while 24% believe they will fall more than 10%, and the remainder think they will fall by 1-5%. No members thought house prices will stabilise or rise.

The members were surveyed for ITV1’s Tonight programme.

Back in April, the International Monetary Fund warned that UK house prices are overvalued by 30% and could soon collapse.

Chair of the SBE, Bronwyn Curtis, warns that those who bought recently may have to wait some time in order to get their money back.

Ms Curtis told the ITV1 programme that it looks as if it’s going to continue and slow growth will be experienced for some time.

Nationwide building society’s latest monthly survey revealed that UK house prices fell 2.5% in May - the largest monthly fall for 17 years.

Furthermore, as the banks have cut back on lending and increased rates, the number of homes changing hands plunged to a 30-year low.

With the continued slide in house prices, figures from the Council of Mortgage Lenders (CML) suggest that there is likely to be an increase in the number of people whose mortgage is worth more than their house.

In the 12 months to the end of March, over 23,200 homeowners who took out a 100% mortgage could fall into negative equity, say the CML.

The first part of the television programme called ‘Beat the Property Slump’ is due to broadcasted tonight at 7.00pm on ITV1.