House prices 'to fall by 20%' | Money | The Observer

House prices 'to fall by 20%' | Money | The Observer

Homeowners should brace themselves for a "short, sharp shock", with house prices set to fall by up to 20% over the next two years as rising unemployment and public spending cuts take their toll, experts are warning.

The cost of the average home fell by up to one-fifth between mid-2008 and the end of 2009 as the credit crunch gripped the mortgage market, but then regained about half of that ground last year, aided by record low interest rates.

With the Bank of England's policymakers locked in an acrimonious public row about whether rates should start rising again to choke off inflation, analysts say prices now look too high to be sustainable.