British house prices will drop 7 percent this year and there is likely to be a 35 percent slump in property market transactions, according to revised forecasts from a leading mortgage body.
The Council of Mortgage Lenders (CML) predicted there will be 770,000 property transactions in England and Wales this year, down from 1.18 million in 2007.
The CML's last forecast in October had predicted a 1 percent rise in house prices and a 14 percent drop in transactions for 2008.
Britain's housing market has slowed sharply in recent months as a global credit crunch has seen lenders retreat from the market and consumers have reacted to rising inflation and a worsening economic outlook.
"The credit crunch has resulted in a gap in the availability of mortgage credit relative to demand. Lenders have changed their product ranges, tightened lending criteria and reviewed their pricing in order to maintain their individual ability to manage demand," Jim Cunningham, senior economist at the CML, said in the forecast.
Gross mortgage lending will total around 285 billion pounds ($560 billion) this year, down 21 percent on 2007 and well below the previous forecast of 340 billion.
Net lending will be half last year's level at 55 billion pounds, and down from the October forecast of 90 billion, it said.
The CML's members include banks, building societies and other lenders and provide 98 percent of UK home loans.
Gross mortgage lending was 25.3 billion pounds in April, up 5 percent from March but down 8 percent from April 2007, the CML's regular lending data showed.