House Prices 'Might Fall by 35%'

House prices are likely to fall by 20 percent in the current downturn, a new poll from news agency Reuters has suggested.

Industry experts from research institutions, banks and investment firms were asked what they thought the UK property market's prospects were in the survey, and revealed that they expected a deep and long-lasting period of negative growth. The average expectation was that the value of homes would lose another seven per cent this year, with the rest of the losses to follow.

Moreover, some of the experts contacted by the news agency predicted a fall of 20 percent this year, and an overall decline of 35 percent - a trend which would put millions into negative equity.

The poll also followed a gloomy house price survey, released yesterday by Halifax. These figures showed that the current value of UK property stands 8.8 percent below that of last year, with a 1.7 percent drop measured for July.

"We think that in most respects the UK is undergoing a US-style housing correction," said David Page, an economist at Investec and a participant in the survey.

"The lack of mortgage funding increases the danger of an over-correction in prices beyond what is required to bring buyer affordability in line," Miles Shipside at Rightmove added.