Bank of England rate setter Kate Barker has warned that property prices could continue to fall, but next month might be too soon for a further interest rate cut.
More house price drop 'cannot be ruled out' after the 211% increase in house prices since 1997, said Barker in a speech in North Staffordshire.
'The risk I believe to be of most concern is around the interplay between the property market and the financial sector resulting from the credit turmoil.' said Baker
'There are clear signs of a marked weakening in both the commercial and residential property markets.' Barker went on: 'While the outlook for house prices is always highly uncertain, it is likely that prices will decline in the short term relative to earnings, and falls in nominal terms cannot be ruled out.'
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