House prices to fall '20% in two years': Joblessness and spending cuts stifle demand

 

 

House prices will slump by 20 per cent over the next two years, experts have warned.

The property market is heading for a ‘double-dip’ as rising unemployment and spending cuts strangle demand, according to the analysis.

 

Interest rates are likely to be increased in the coming months to keep rising inflation in check and higher mortgage costs seem certain to add momentum to plunging property prices.

 

 

Paul Diggle, property specialist at research consultants Capital Economics, said: ‘Prices are trending slowly downwards at the moment, but our view is that this is really the start of the second leg of the correction, and we expect prices to fall significantly further.’

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