House prices 'need to come down for market to move forward'

Posted: 08 Jan 2010 10:15:51 GMT

UK house prices need to come down before there will be a full recovery of the property market, one expert states.

Paul Holmes, chief executive officer at Firstrung, says that due to this factor, significant decreases in house prices will occur over the next two years.

He anticipates falls of 0.5 per cent per calendar month, amassing a total reduction of 35 per cent from the prices that were seen in 2007.

Mr Holmes adds: "I think they will revert to where they should have been heading, which is further down."

Last year's £.12 trillion government bailout for the banks helped to stabilise the market, he suggests, agreeing with recent reports from the Treasury Select Committee, which stated that current house prices are at a "potentially unstable" level.

According to the latest Land Registry statistics, the average house price in England and Wales rose by 0.9 per cent in November to £161, 554.

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