Citigroup predicts 10pc fall in house prices
Edmund Conway
Last Updated: 1:13am GMT 16/12/2007
House prices are set to fall by 10 per cent over the next three years, experts at Citigroup have warned.
The bank's chief UK economist said property prices were heading for a major downturn, losing a 10th of their value or more over the next three years.
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"Whether you call it a crash or a slump, this is going to be very painful," said Michael Saunders. He added that the central banks' move to inject liquidity into money markets would not "remove the prospect the economy will slow sharply because of the drag from severe housing weakness, high household debts, rate hikes and the tightening of credit availability".
Citigroup's warning is the latest from a major bank on house prices and follows Morgan Stanley's prediction of 10 per cent price declines. Until recently, few banks forecast significant falls in property values but fresh evidence of a slowdown has seen several forecasters warn of a housing crash.
Halifax, Nationwide and the Royal Institution of Chartered Surveyors have warned of widespread falls in prices across the country, and Rightmove is expected to announce a larger-than-expected drop in average asking prices in its December Index. Saunders said his worries had been compounded by signs that mortgage companies are tightening their lending standards as they pass on the higher cost of borrowing to customers.
"It's going to be fairly bleak," he added. "I expect house prices to fall by 3 per cent each year until the end of 2010, though the 10 per cent fall could easily come in one go."
Edmund Conway
Last Updated: 1:13am GMT 16/12/2007
House prices are set to fall by 10 per cent over the next three years, experts at Citigroup have warned.
The bank's chief UK economist said property prices were heading for a major downturn, losing a 10th of their value or more over the next three years.
advertisement
"Whether you call it a crash or a slump, this is going to be very painful," said Michael Saunders. He added that the central banks' move to inject liquidity into money markets would not "remove the prospect the economy will slow sharply because of the drag from severe housing weakness, high household debts, rate hikes and the tightening of credit availability".
Citigroup's warning is the latest from a major bank on house prices and follows Morgan Stanley's prediction of 10 per cent price declines. Until recently, few banks forecast significant falls in property values but fresh evidence of a slowdown has seen several forecasters warn of a housing crash.
Halifax, Nationwide and the Royal Institution of Chartered Surveyors have warned of widespread falls in prices across the country, and Rightmove is expected to announce a larger-than-expected drop in average asking prices in its December Index. Saunders said his worries had been compounded by signs that mortgage companies are tightening their lending standards as they pass on the higher cost of borrowing to customers.
"It's going to be fairly bleak," he added. "I expect house prices to fall by 3 per cent each year until the end of 2010, though the 10 per cent fall could easily come in one go."
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