Property prices will fall by 10% according to expert

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by Kay Murchie

According to Neil Woodford, head of investment house, Invesco Perpetual, property prices will fall by 10% during 2008.

Mr Woodford, one of Britain’s most powerful fund managers said house prices are too high and the average home will fall by £18,500 by the end of the year - the equivalent of £50 a day.

He added that the drop could be much worse in some parts of the country with the biggest losers the owners of new-build flats aimed at buy-to-let.

Mr Woodford, who handles almost £20 billion of investors’ money, said the country’s 18.5 million homeowners should be prepared for a torrid year. He said although my forecast is for UK property prices to fall 8-10% in 2008, the decline may be much worse in certain areas.

Mr Woodford’s forecast is more pessimistic than those of any of the respected housing commentators. Capital Economics have predicted a drop of 5% during 2008.

Recent figures published by the Land Registry have shown that the cost of a home in England Wales dropped by 0.4% last month. The fall has meant the average cost of a home is now £184,469.

Furthermore, recent reports by Nationwide Building Society and Halifax (which are one-month ahead of the Land Registry figures) have already shown property prices falling over recent months.