Forgive my cynicism, but I'll take my advice from big city institutions rather than the internet. What's your reasoning for such a catastrophic fall? Do you not think the BofE and Govt will step in and try and sure the market up should prices start tumbling?
With tax payers money? They would be out of office instantly. Look at the flak they are still getting over the NR debacle.
If you'd read this thread from start to finish then you'd see the indicators that support my contention. I am not going to try and convince you, do some research and you'll see where I am coming from. I wouldn't be so quick to take your advice from 'big city institutions' though, they have a vested interest in making profit - you won't get impartial advice from them!
The reasons why I believe there will be a fall are simple. The housing market is based mainly on two things; consumer sentiment and the availability of credit. The era of cheap credit is over, regardless of what the BoE sets as it's Base Rate, the banks will set their own as they desperately try to claw back losses from expose to bad credit around the globe. Coupled with a reluctance to lend money between themselves you will now get a mortgage with a much higher rate of interest then was previously the case, if you are offered a mortgage at all! The deposit you'll need is also now in the order of 20 - 25%. This hits FTBs particularly hard, so you have far fewer people coming into the market at the bottom. That then prevents people from moving up the ladder because no-one can afford to buy their home, but they probably would struggle to get a new mortgage anyway because they're already leveraged to the hilt. Prices will then naturally have to reduce to a more realistic level.
There are a load of other factors which complicate this further. As a nation we have a credit burden of something like £1.75 Trillion. A percentage of the Nation are overburdened with unsecured (and secured) debt. As servicing that debt becomes more expensive (credit card rates being increased, application criteria being tightened) more and more people are going to go under. A glut of homes will flood the market, most sold at auction having been repossessed. You can add to that the properties flooding the market from BTL landlords selling to make most of the favorable CGT changes in April. This will further suppress property prices.
Consumer sentiment is a big issue. If property is increasing in value they'll spend money on the high street, if property is decreasing then they won't. Consumers that don't spend money cause a recession, which is what we shall have shortly. The signs of this are everywhere - walk down any high street and look at the sales on already (before Christmas!), look at the discounts being offered. If stores were hitting sales targets they'd keep rices high, their hands are being forced because this Christmas is dreadful for retail.
There's far more I could detail, but I have given an overview. As I said, don't listen to me - research yourself.
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