House prices most at threat since 1989 as inflation bites

House prices most at threat since 1989 as inflation bites

Homebuyers should "under no circumstances" take out large mortgages to buy property, one of Britain's leading housing experts has warned. Paul Cheshire, a former government adviser and emeritus professor at the London School of Economics and Political Science, said the market was the most exposed to persistently falling prices since the early 1990s and predicted a nationwide drop of at least 10pc. He warned prospective buyers from taking out big loans just as the market could be about to go into freefall. “The last time the housing market looked this bad was 1989. That’s when the hairs on the back of my neck were telling me there would be real problems. My instinct right now is that under no circumstances would I borrow a lot of money to buy a house," he said. Today's outlook is worse than during the global financial crisis because the pressures of rising inflation and falling real incomes will be felt across the entire market, said Mr Cheshire. He added that there could be house price falls of more than 10pc, depending on uncertain economic factors. “The events of 2008 were catastrophic for northern cities, but London recovered fairly quickly. Now the outlook is generally