Hometrack adds to house price fall predictions

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by Kay Murchie

Housing intelligence company Hometrack is predicting that house prices will fall by a further 10% in 2009 and 3% in 2009.

The company said the average cost of a home has fallen by about 9%, meaning house prices will have fallen by 22% from peak-to-trough.

Richard Donnell of Hometrack said the projected drop in house prices next year would put affordability in terms of average debt servicing costs, on a par with the lows of the early 1990s.

Meanwhile, the organisation is predicting that 70,000 people will have their home repossessed in 2009. This compares with the 75,000 which the Council of Mortgage Lenders (CML) have predicted for next year.

Last week, the chief executive of Barclays warned that house prices are likely to fall a further 10% to 15% next year. Barclays had expected property prices to drop by about 25% to 30% between 2007 and the end of 2009, and the UK is only halfway through the property price slump.

Today Tim Drayson of Legal & General Investment Management (LGIM) made a prediction that house prices will not recover to their 2007 peak for at least 10 years.

However, Hometrack has emphasised that forecasting house price falls is difficult in the current economic climate.

Recently, the CML described house price predictions as ‘futile’ due to the volatility in the market.