House prices look set to continue falling during the coming year as Government spending cuts bite and the problems in the mortgage market continue, economists said today.
The Financial Times said 50 out of the 56 economists it interviewed who expressed a firm view on house prices predicted further falls, with just six expecting values to rise.
But economists are expecting declines of between 5% and 10% as households struggle with tight finances, rather than a house price crash.
Separate research by estate agent Savills also warned that house price falls were likely to be worst in the North, where the housing market is already under pressure and public sector spending cuts will have most impact.
Andrew Goodwin, of Oxford Economics, told the FT: "Last year's supply shortage has been corrected, which has taken away the major support to prices, but, while the market fundamentals remain weak, they are more favourable than they were in the house price crash of 2008."
Ian McCafferty, chief economist of the CBI, said sales volumes were likely to be hit harder than prices due to the absence of distressed selling.
The London property market is expected to continue to perform better than house prices in other areas of the country, with three-bedroom semi-detached homes outside the capital expected to be the worst hit as a result of public sector cuts.