House prices could drop 10% this year – papers 9 April

House prices could fall in Britain by as much as 10% in the coming year, the world's leading economic authority has warned, The Telegraph reports.

Britain is heading for a decline in the housing market similar to that in America, while the number of people having their homes repossessed could double, the International Monetary Fund said.

In addition, millions of home owners face an increase of £3,000 or more in their annual mortgage bills as a result of the credit crisis, the report said.

THE BANK OF ENGLAND IS UNDER intense pressure to cut interest rates again tomorrow after house prices fell by the biggest margin since the early 1990s crash and ministers tried to prevent a spate of repossessions, The Times reports.

Gordon Brown insisted that the latest falls — 2.5%, or nearly £5,000 for a typical property in March, according to the Halifax — were containable after the big gains of the past decade. The figures showed, however, that annual house price growth has slowed to its lowest level for 12 years. Property prices rose by only 1.1% during the past 12 months, meaning that they are falling annually in real terms.

The falls were even more dramatic in some regions, such as the West Midlands, where they fell by an average of £9,000 during the first three months of the year, and Wales, where the average cost of a home has dropped by about £8,000.

THE CREDIT CRUNCH COULD COST the world's banking system the best part of $1tn (£500bn), the International Monetary Fund said yesterday, in the highest estimate yet of the damage that could be inflicted by the crisis, The Guardian reports.

The IMF's half-yearly Global Financial Stability Report said: "The events of the past six months have demonstrated the fragility of the global financial system and raised fundamental questions about the effectiveness of the response by private and public sector institutions."

The world's financial system has come under increasing strain and the risks remained "elevated", the multinational institution said.

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