UK House Prices Situation: Falling confidence is affecting sale prices

UK House Prices Forecast: Real-term falls over 2008

Expert Says 10% Fall in House Prices Required

Rather than trying to avoid a fall in house prices, buyers and sellers should welcome it, according to Miles Shipside, a director of property website Rightmove.

Interviewed at the recent Wriglesworth Consultancy Great Housing Market Debate, Shipside said recently that "There is a large gap between sellers' expectation and buyers' ability to pay". Shipside went on to say that "the market needs to openly accept a ten per cent reduction in house prices to achieve an orderly correction to affordability".

Shipside wasn't alone in this sentiment, either. Of 150 people interviewed, a staggering 149 said that they believed that house prices would fall over the coming year.

Leading Bank Economist Forecasts 20% Fall Through 2008/9

Professor David Miles is a senior economist at investment bank Morgan Stanley. Despite having a reputation for doom-and-gloom forecasts when it comes to the property market, he believes he is right to expect falls of up to 20% in average house prices over the next two years.

Miles has based his forecasts on market analysis and derivatives prices and says that this forecast need not necessarily be a cause of concern, as there will be "as many winners as losers".

Miles believes that an improvement in affordability will open up the market to first-time buyers and others who have been excluded by high housing prices - although his reference to losers is an acknowledgment that some will suffer problems as a result of falling prices.

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

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