House prices to drop by a quarter

House prices are set to plummet by as much as a quarter, according to new research by the Centre for Economics and Business Research (CEBR).

In its latest issue of Consumer and Housing Prospects the CEBR states that from peak prices in 2007 homes could lose an average of £50,000 in 2009 – taking them below 2004 prices.

According to the group, this is takes into account expected cuts in the Bank of England''s base rate.

The CEBR expects prices to stagnate in 2010, before climbing to just below 2007 levels in 2011 and 2012.

Ben Read, managing economist at the CEBR, said: "Confidence in the housing market has been shattered as lack of mortgage availability has left few sellers chasing even fewer buyers, and expectations of falling prices have become embedded."

Meanwhile, banks are expected to cut 62,000 jobs in London by the end of next year, reports Bloomberg.

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