House prices fall as mortgage approvals nosedive

House prices will fall in 2008 following the damaging impact of the credit crunch, an expert has said.

Vicky Redwood, UK economist at Capital Economics, told Reuters that the impact of the credit crunch has caused irreparable damage, despite the recent fall in interbank lending rates.

"The question now is not whether house prices will fall, but how much they will fall," she added.

Her comments come as mortgage approvals in December are reported to have fallen to their lowest level since 1999, according to figures released last week by the Bank of England.

Approvals for house purchases fell from 81,000 in November to 73,000 in December despite analysts predicting a figure of 79,000 for the month, the article noted.

The figures will put added pressure on the Bank to cut interest rates next week, according to the news provider.

Interest rates are currently at 5.5 per cent in the UK and were held last month in response to inflationary pressures and the aim of keeping consumer price inflation in line with the government''s target of two per cent.

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