Knight Frank is forecasting a ‘perfect storm’ this year which will cause UK house prices to fall by 5%.
It is expecting the country house market to slip by 2.8%, but believes that prices in prime central London will continue to buck the trend and climb 5%.
Grainne Gilmore, Knight Frank’s head of UK residential research, said: “We forecast that mainstream UK house prices will fall by 5% in 2012. Once inflation is taken into account, this will result in a deeper fall in real terms.
“There will be regional differences in house price performance, however, with the South-East and London holding up better than the North.
“We expect interest rates to remain low, which will support the market to some extent, but we still see prices falling, as a perfect storm of deteriorating economic performance, public sector job cuts and lack of mortgage lending hits activity and prices.”
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