Experts warn that UK home prices could drop by as much as 20% over the next two years as unemployment continues to rise and the government makes more public spending cuts.

Average home prices fell by the same percentage from the middle of 2008 until the end of 2009, but bounced back by 10% in 2010 with the help of low interest rates.

Paul Diggle, a property economist at consultancy firm Capital Economics, believes that the average home is overvalued by 20%, and that prices would soon start falling. "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," he says.

Many members of the Royal Institution of Chartered Surveyors hav been saying that prices have been flat since 2009. Rightmove, the UK's largest property website, reveals that there has been a 21% increase of properties put on the market in London, while the rest of the country remains "frozen over".

Rightmove commercial director Miles Shipside says that local prices will depend on the fortunes of each area's population. Those with the highest unemployment numbers will suffer the most.

Source: Guardian.co.uk