Shock 20pc collapse in house prices forecast

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Landlords with insurance for rented property could see the value of their portfolios slashed amid gloomy predictions for the UK housing market.

House prices could drop up to 20% over the next two years as a result of increasing unemployment and public spending cuts.

“Prices are trending slowly downwards at the moment, but our view is that this is really the start of the second leg of the correction, and we expect prices to fall significantly further,” said Paul Diggle, property economist at consultancy Capital Economics.

The Guardian reports that he calculates the average home remains up to 20% overvalued by historical standards.

House prices fell by around 20% between 2008-2009 – but made up half the losses last year.

Another price drop would be a significant blow to many landlords looking to sell in the short term.

However, the so-called “price correction” could allow cash-rich owners the opportunity to buy more property.

Many landlords will simply hold on to their properties and ride out the fall until prices pick up again.

In the meantime they should make sure they protect their existing properties as comprehensively as possible by finding a deal on landlord insurance that best suits their requirements.

Discount Landlord Insurance provides a comprehensive range of policies to cover all your needs as a landlord, at the most competitive landlord insurance rates available.

21st February 2011