divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/68864?ns=guardianpageName=Business%3A+UK+house+prices+%27to+plunge+like+US%27ch=Businessc3=The+Observerc4=Housing+market+%28Business%29%2CUS+housing+and+sub-prime+crisis+%28Business%29%2CRecession+%28UK%29%2CBusiness%2CHouse+prices+%28Money%29%2CRepossessions+%28Money%29%2CMoney%2CObserverc5=Personal+Finance%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Rates%2CUS+Economyc6=Heather+Stewartc7=2008_11_30c8=1126210c9=articlec10=GUc11=Businessc12=Housing+marketc13=c14=h2=GU%2FBusiness%2FHousing+market" width="1" height="1" //divpRobert Shiller, the Yale economist who forecast both the bursting of the dotcom bubble and America's property crash, is warning Britain's homeowners to expect things to get every bit as bad on this side of the Atlantic./ppIn London to promote his new book, The Subprime Solution, Shiller told The Observer that consumers should be wary of the comforting excuses many analysts find for explaining why Britain's housing market will be hit less hard than America's, where prices have already fallen by more than a quarter, and repossessions are rife./pp'A lot of people say that in the UK we haven't seen so many defaults on mortgages - but we're just earlier in the cycle,' he said. /pp'These housing cycles go for a long time. Real estate markets are very different from liquid financial markets, in that they have a lot of momentum, and they continue in the same direction for a long time.' He pointed out that during the last housing boom and bust, in the 1980s and early 1990s, prices in London more than doubled, in inflation-adjusted terms, 'and then they came almost all the way back down again. That's certainly a possibility now, and that would be huge. Think of all the balance-sheet problems that would cause, for banks and for households.'/ppIn his 2000 book Irrational Exuberance, Shiller warned that share prices were dangerously overvalued, and foretold the subsequent crash. He used the second edition, in 2005, to issue a timely warning about the ill-fated American housing boom, which, as in the UK, had spawned thousands of property speculators, and driven prices to once-unthinkable levels./ppRaising the spectre of the Great Depression of the 1930s, when it took many years for the world's major economies to recover, Shiller added that the government would probably have to carry out more bail-outs before the downturn is over, to help restore the public's faith in financial institutions./pp'Northern Rock was the first bank run since the 1860s. Once that happens, and you have these photographs of people lining up outside banks, there's a shock to confidence, and a loss of trust in financial institutions,' he said./ppShiller was invited to Downing Street last week to share his analysis of the crisis with Alistair Darling and Gordon Brown. He is calling for much better financial education for the public, and new standardised mortgages which adjust to suit changes in borrowers' personal circumstances./pdiv style="float: left; margin-right: 10px; margin-bottom: 10px;"ullia href="http://www.guardian.co.uk/business/housingmarket"Housing market/a/lilia href="http://www.guardian.co.uk/business/subprimecrisis"US housing and sub-prime crisis/a/lilia href="http://www.guardian.co.uk/business/recession"Recession/a/lilia href="http://www.guardian.co.uk/money/houseprices"House prices/a/lilia href="http://www.guardian.co.uk/money/repossessions"Repossessions/a/li/ul/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a pa href="http://feedads.googleadservices.com/~at/fzUVTeMMdqvmTmN_Qf2GTkJ2KaQ/a"img src="http://feedads.googleadservices.com/~at/fzUVTeMMdqvmTmN_Qf2GTkJ2KaQ/i" border="0" ismap="true"/img/a/p