Lunchtime news 19 March 2024

House prices could fall by up to 20 per cent over the next two years, a senior economist warned yesterday. The prediction, from Professor David Miles, chief UK economist at Morgan Stanley, will dismay millions of homeowners. At present, the average house price is about £200,000. If Mr Miles is correct, it could fall as low as £160,000 by the end of 2009. The biggest losers will be those who have forked out a fortune to buy a home over the past couple of years. However, Professor Miles, a former government adviser, insisted such a fall would not be a catastrophe. He said: ‘I am at the pessimistic end of the spectrum, but I don’t think it should be seen as the pessimistic end because there are as many gainers as losers.’ The winners, he said, will be first-time buyers and those on lower salaries who will finally be able to afford to buy.

But Citizens’ Advice warned yesterday that the number of house repossessions is already soaring. Higher interest rates, rising energy and food bills, fuel prices and bigger council tax demands are forcing consumers into debt, research revealed yesterday. Citizens Advice said a survey of three-quarters of its bureaus in England and Wales showed they had dealt with 215,000 new debt problems during the first two months of 2008. More than 9,300 were seeking help with mortgages – 35 per cent up compared with the same period in 2007.

And there was more gloom in store for the middle classes, a leading debt group said yesterday, as more of them become victims of the spiralling debt crisis because of ‘super-inflationary’ rises in the cost of living. The Consumer Credit Counselling Service said that while steep rises in energy and mortgage costs had hit the oldest and poorest hardest, the increases had been so dramatic that even the professional classes were struggling. Experts said that the figures marked a more serious era in the country’s battle with debt because they showed that the problem had extended from borrowers with credit cards and personal loans to all households, irrespective of how much they had borrowed or what they earned.