Invesco Perpetual’s Neil Woodford has forecast that house prices will fall by as much as 10 per cent this year.
Woodford, who manages the £9.5bn high-income fund, believes the average home will drop by £18,500 by the end of the year or £50 a day.
In a note to investors obtained by the Daily Mail, Woodford warns: “Although my forecast is for house prices across the UK to fall 8-10 per cent in 2008, the decline may be much worse in certain areas.”
He says the biggest losers will be owners of newbuild flats which are “almost unsellable”.
John Charcol senior tech-nical manager Ray Boulger says: “There are clearly problems in the market which could cause it to fall by up to 10 per cent but I do not believe it will.
“Interest rates are a major influence. We are going to ee the bank base rate falling almost definitely next month and we will see it down to 5 per cent before long.”