House prices will fall a record-breaking 35 per cent by next autumn, a leading firm of economists warned yesterday.
The collapse will be the biggest fall ever seen in this country.
The claim, from the consultancy Capital Economics, will horrify homeowners who face being plunged into negative equity.
Not needed: Estate agent boards piled up in a yard in Hull
According to the forecast, around £65,000 will be wiped off the value of the average home. At the height of the property boom last year the average home was worth £186,000. By next autumn it will be worth around £120,000.
Capital Economics had originally expected house prices to drop 35 per cent by the end of 2010.
But yesterday it amended this forecast in the light of recent economic turmoil. The consultancy still expects the same fall, but squeezed into a much shorter period.
Prices are then predicted to stagnate for 18 months before a tentative recovery begins in 2011.
Ed Stansfield, property economist at Capital Economics, said: ‘The sheer speed of adjustment is causing alarm.’
The housing market has been affected by the credit crunch that has frozen the world’s financial markets
Read moreHouse prices to plummet by 35% – the biggest ever fall in Britain