Residential property prices in the world’s major economies, which last year were down an average of 5% from 2007, may keep dropping, according to a researcher from the International Monetary Fund.

Corrections in real estate markets so far have not been sufficient to erode the excesses of the peak years, according to Prakash Loungani, an adviser to the International Monetary Fund’s research department.

He believes that property prices in many countries still have room to fall as they are still over valued but he does not name which countries are likely to see more declines.

Writing in the March issue of the IMF’s Finance and Development magazine, he says prices will probably decline further because they remain well above levels seen at the start of the housing boom around 2000 and also because values were higher than rents and income, which serve as long-run anchors on the cost of residential real estate.

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