House prices ‘will drop seven per cent in 2011’
Business Digest: No crash - but there’ll be a 10 per cent drop from 2010 peak, says economist
House prices will drop seven per cent next year, according to economist Howard Archer, as homeowners struggle to find affordable deals and banks keep a tight rein on who they decide to lend to amid rising unemployment and fears that borrowers will default on their repayments.
Figures released by the Bank of England showed that mortgage lending fell by 10 per cent over the past year. While November saw 1,000 more mortgages being approved than in September or October, the total of 45,000 for the month was still 26 per cent down on November 2009.
Archer, chief UK and European economist at IHS Global Insight, said: “This evidence of low - but possibly stabilising - housing market activity reinforces our belief that house prices will not crash but will trend down gradually to lose around 10 per cent from their peak 2010 levels by the end of 2011.
“Given that house prices have already fallen by some three per cent overall in recent months, we believe that house prices will fall by around seven per cent in 2011.”
Read a full report at the Daily Telegraph. ·
