June 6, 2008 / 3:22 PM / in 11 years

UK house prices set for 30 pct fall, derivatives show

LONDON, June 6 (Reuters) - Britain’s housing downturn is unlikely to bottom out until 2011 by which time average prices will have fallen by around 30 percent from their peak last August, derivatives data showed on Friday.

The market also indicated that it could take another 10 years for house prices to regain current levels.

“Ten years under water? It was nine years last time,” said interbank derivatives broker Tradition Property, referring to Britain’s last housing crash and the time it took for the Halifax price index to recover after it peaked in July 1989.

The Tradition Future HPI, which is based on the non-seasonally adjusted version of the Halifax price index, sees average British house prices bottoming out below 143,000 pounds in 2011 from 186,482 pounds currently.

According to derivatives market data, British house prices are likely to shed another 20 percent in the next 24 months.

Click on [ID:L06895104] to see current and historic derivative prices).

Britain’s biggest mortgage lender HBOS Plc HBOS.L, which owns the Halifax brand, says the average cost of a house fell by a bigger-than-expected and seasonally-adjusted 2.4 percent in May.

The market’s total decline since prices peaked in August is almost 8 percent, HBOS said.

(Reporting by William Kemble-Diaz; Editing by Ian Jones)

See www.reutersrealestate.com for the global service for real estate professionals from Reuters.

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