'10% chance of housing market crash'

The UK Housing market has a one in ten chance of heading for a 1990s style price crash according to leading experts.

Simon Rubinsohn, chief economist at the royal institution Chartered Surveyors, believes that there is a ten percent possibility that the value of property could fall dramatically.

He went on to say there was also a twenty percent chance that the house prices in London would decrease by ten percent during the comming 12 months. He concluded by saying that it was most likely that house price growth would remain flat during the comming 12 to 15 months, down from his earlier prediction that prices would rise by three percent.

Nationwide Building society has also expressed concerns at the current house price growth. Fionnuala Earley, group economist at Nationwide, predicts house price inflation to decrease to just 3 percent next year. She went on to say that the global financial crisis could make the current slowdown in the housing market worse.

However Ray Boulger, senior technical manager at John Charocol, said there were unlikely to be house price falls, suggesting that the problems in the credit markets could be good for house price inflation in the long term.

He said: ''Saying the is a one in ten chance (of a house price crash) is more or less saying they don't think it is going to happen.

''The last quarterly survey from Halifax showed three regions with small falls and I think for the second half of this year we will see prices pretty well flatlining.

Most people think the credit crunch will have a negative impact on house prices and I think in the short term that will be right, but looking ahead a few months, I think it will have a positive impact.''

he said the biggest factor affecting house price growth was interest rates, and while people had been expecting these to rise further to six percent, it now looked likely that they had peaked and might even be comming down soon.

He concluded by saying: ''House prices will flatline for at least six months, but I don't think we will see steap falls.''

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