Property prices predicted to drop in 2008

House prices in the UK are predicted to drop by 10% next year, according to Morgan Stanley.

With early signs of a slump in the property market, 2008 could see an end to the UK’s property boom which has lasted for the last 10 years, as a result of banks enforcing stricter lending criteria and the slowdown of economic growth.

A drop in property values could result in many homeowner’s properties being worth less than the mortgage secured against it, known as ‘negative equity’, and may lead to an increase in number of repossessions.

It is estimated that by the end of next year, property values will have decreased to the prices where they were at the end of 2006