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Double dip on the way, claims economic group

19 October 2009
Written by rosalind renshaw

House prices will fall 10% next year and a further 5% in 2011 as job losses climb, says Capital Economics.

The notoriously downbeat forecaster – it is being so gloomy that keeps it going – says that rising unemployment together with mortgage illiquidity will be responsible for a new wave of house price falls.

Capital Economics admits that the housing market is now showing signs of turning around, but adds that the recovery is unsustainable because of severe job cuts ahead in the public sector. It also warns of a downside to a rapid recovery.

“While we may be underestimating the potential for an economic recovery, stronger growth would be accompanied by higher interest rates. That would only add to the pressure for lower house prices,” it said.

Its prediction of 15% house price falls in two years is in line with the warning by ratings agency Fitch which two weeks ago forecast a further 17% fall.

Comments

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    Don't you just love predictions? Okay - so here's mine. Tomorrow, at approximately dawn, the sun will rise in the East. It will then make its way steadily westwards, in an arc via the south, until it sets at approximately dusk. BBC - I am available for comment at any time...

    • 19 October 2009 13:55 PM
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    BBC - Oct 2003 "House prices are set to fall by 20% in the next 18 months, a leading economics firm predicts. (Capital economists)"

    This is the same outfit who missed the last 2 recessions and failed to call this one right either. Why listen?

    • 19 October 2009 10:09 AM
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