Predicted price fall may help those in debt get on property ladder

MONDAY, DECEMBER 11, 2006

Research by PricewaterhouseCoopers (PwC) has suggested there is a one in three chance of house prices are set to fall between now and 2010. Although PwC says house prices are likely to rise again after that period, the short-term news may come as those struggling to get onto the property market due to debt problems.

People who are struggling to get on the market because of debt problems may get a helping hand according to a new report.

Research published by PricewaterhouseCoopers (PwC) on November 2nd has suggested there is a 33 per cent chance house prices will fall between now and 2010.

PwC economist John Raven said: "Despite the recent relative robustness of the UK housing market, potential home-buyers and investors should not underestimate its volatility in the medium term."

By using the Monte Carlo Simulation, PwC compared to house prices to earnings - and predicted that consistently rising house prices are set for a short-term decrease for the next four years.

However, he added that by 2020 there was an 87 per cent chance of property prices being higher than they currently are now.

News of the report comes as people continue to struggle on the property market due to debt problems.

A survey by the Abbey, also released on October 30th, reported around 7.4 million people cannot afford house prices in their area because of debt.

Meanwhile, a Bank of England report on October 30th indicated increased debt problems across the country as credit card borrowing rose to £365 million. The bank indicated its mortgage approvals were at their highest rate for over two years, while Halifax and Nationwide both reported house price increases.