Landlords may be affected after it was predicted that property prices are due to fall over the next two years.

Chief executive officer at Firstrung Paul Holmes said that it is necessary for values to drop if the housing market is to progress.

"From peak to trough we will see a fall of about 35 per cent,"Mr Holmes said.

Prices peaked in August to September in 2007 and the "trough"is expected to occur in the middle of next year.

He added that it will not be a steady fall. Quantitative easing and the bank bailout means that house prices were flat in 2009, however these financial policies are unlikely to occur this year.

"The bottom line is if interest rates are hovering around five per cent …then people traditionally can only afford three and a half to four times their income to buy a house,"he continued.

By looking at long-term averages over a 20 to 30 year period, prices are approximately 15 to 20 per cent higher than normal.

Mr Holmes's claims follow a report from the Treasury Select Committee on January 6th that indicated current house prices could be "unsustainable".

Written by Mark GarnerADNFCR-2002-ID-19547160-ADNFCR

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