The chief executive of Savills forecast house prices in London to fall 25% by the end of next year, while the effect of the credit squeeze on property was now spreading across Europe and into Asia.

The comments by Jeremy Helsby, which accompanied a gloomy trading update from the international property group, prompted cuts in profit forecasts and a 10% fall in its share price.

Helsby said that the tough trading conditions 'make predictions of full year performance very difficult'.

He added that there was no sign of an improvement in confidence, which was necessary for a recovery. ABN Amro, the group’s broker, cut its profit forecast for the year from £62m to £52m, which compares with a pre-tax profit in 2007 of £85.5m.

The worst area was in the UK residential market, which accounted for 20% of group profits last year. In London, housing transactions were down 45% on a year ago, with prices having fallen by about 7.5%.

Financial Times, Daily Telegraph

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