Lenders turn wary of house-price predictions
Anne Ashworth and James Charles
How far could the housing market fall next year? Will the decrease exceed this year’s average of 15 per cent? Don’t bother to ask Halifax or the Nationwide, those formerly voluble commentators, because they have become rather coy on the subject. (AtW's comment: what happened - cat got their tongues?
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Both have followed the example of the Council of Mortgage Lenders (CML), the trade body, in declining to issue official forecasts for 2009, having earlier, in the case of Halifax, intimated that prices might be headed downwards. The Nationwide has been producing forecasts since 1988, but the building society will now say little more than that it expects a “bumpy ride”. Halifax, a crystal ball gazer since 1998 and soon to be taken over by Lloyds TSB, asserts that it is “inappropriate” to make a forecast.
Curiously, however, the bosses of these lenders have, like their peers, openly expressed their views. Sir Victor Blank, the chairman of Lloyds TSB, expects a fall of another 10 per cent, which makes him slightly less pessimistic than John Varley, the chief executive of Barclays, who is looking for a decline of 10 per cent to 15 per cent. Graham Beale, the Nationwide chief executive, believes that, by Christmas 2010, the market will be 25 per cent below its level at the start of 2008.
Estate agencies, which are paying the price of the downturn in jobs and turnover, are surprisingly candid about the market’s bleak prospects.
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Knight Frank said yesterday: “We are now at least halfway through an estimated 30 per cent peak-to-trough decline.” That would bring values back to their level in 2003, affecting the five million properties bought since then. (AtW's comment: that's not a very frank comment, is it?
)
Savills, which published its 2009 forecast last month, expects a peak-to-trough decline of 25 per cent. However, the business believes that prime London neighbourhoods, such as Notting Hill and Chelsea, could face a more painful fate, dropping by about 30 per cent overall. Yolande Barnes, the director of residential research for Savills, reported that prices in the capital’s chicest postcodes were down by 20 per cent from their City-bonus-driven heyday in 2007.
Prices in Holland Park, Kensington and Notting Hill have plummeted by 11.8 per cent in the past quarter, as some of their residents were thrown out of their jobs in the City or in Mayfair (aka hedge-fund central). If such people are dangerously “overleveraged” (what everyone else would call “massively overmortgaged”) and need to sell in a hurry, they may need to accept prices as much as 40 per cent below what they paid for their homes, according to Lulu Egerton, of Strutt & Parker.
Ms Egerton said: “We are trying to sell a house in Chelsea, London SW3, which was on the market ten months ago at £8 million. We are now hoping to sell at circa £5 million. (AtW's comment: foreign investors who put money into top end UK property are well and truly shafted - they have already lost 50% of the value of their investment, though for the oligarchs who bought into this junk it is more important to have low chance of extradiction back to Russia that matters, everyone else is shafted.) For our banker client, keeping his family home is no longer an option.”
The size of the declines in the capital’s smartest locations, combined with the slide in sterling, is beginning to excite buyers who like money-off deals. Ms Barnes said that London property had become 50 per cent cheaper for a Japanese investor and 40 per cent less expensive for a buyer from the eurozone.
Bargain-hunting could mean that the Central London market might start to bottom out towards the end of next year.
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Where are all those people on this forum who claimed UK property prices are supported by fundamental like high population density, all those foreigners buying houses etc?
It's clear now even for the dimwitted that rampart house pricing inflation was supported by 125% morgages and other unchecked lending practices.
Anne Ashworth and James Charles
How far could the housing market fall next year? Will the decrease exceed this year’s average of 15 per cent? Don’t bother to ask Halifax or the Nationwide, those formerly voluble commentators, because they have become rather coy on the subject. (AtW's comment: what happened - cat got their tongues?
)Both have followed the example of the Council of Mortgage Lenders (CML), the trade body, in declining to issue official forecasts for 2009, having earlier, in the case of Halifax, intimated that prices might be headed downwards. The Nationwide has been producing forecasts since 1988, but the building society will now say little more than that it expects a “bumpy ride”. Halifax, a crystal ball gazer since 1998 and soon to be taken over by Lloyds TSB, asserts that it is “inappropriate” to make a forecast.
Curiously, however, the bosses of these lenders have, like their peers, openly expressed their views. Sir Victor Blank, the chairman of Lloyds TSB, expects a fall of another 10 per cent, which makes him slightly less pessimistic than John Varley, the chief executive of Barclays, who is looking for a decline of 10 per cent to 15 per cent. Graham Beale, the Nationwide chief executive, believes that, by Christmas 2010, the market will be 25 per cent below its level at the start of 2008.
Estate agencies, which are paying the price of the downturn in jobs and turnover, are surprisingly candid about the market’s bleak prospects.
Related Links
Knight Frank said yesterday: “We are now at least halfway through an estimated 30 per cent peak-to-trough decline.” That would bring values back to their level in 2003, affecting the five million properties bought since then. (AtW's comment: that's not a very frank comment, is it?
)Savills, which published its 2009 forecast last month, expects a peak-to-trough decline of 25 per cent. However, the business believes that prime London neighbourhoods, such as Notting Hill and Chelsea, could face a more painful fate, dropping by about 30 per cent overall. Yolande Barnes, the director of residential research for Savills, reported that prices in the capital’s chicest postcodes were down by 20 per cent from their City-bonus-driven heyday in 2007.
Prices in Holland Park, Kensington and Notting Hill have plummeted by 11.8 per cent in the past quarter, as some of their residents were thrown out of their jobs in the City or in Mayfair (aka hedge-fund central). If such people are dangerously “overleveraged” (what everyone else would call “massively overmortgaged”) and need to sell in a hurry, they may need to accept prices as much as 40 per cent below what they paid for their homes, according to Lulu Egerton, of Strutt & Parker.
Ms Egerton said: “We are trying to sell a house in Chelsea, London SW3, which was on the market ten months ago at £8 million. We are now hoping to sell at circa £5 million. (AtW's comment: foreign investors who put money into top end UK property are well and truly shafted - they have already lost 50% of the value of their investment, though for the oligarchs who bought into this junk it is more important to have low chance of extradiction back to Russia that matters, everyone else is shafted.) For our banker client, keeping his family home is no longer an option.”
The size of the declines in the capital’s smartest locations, combined with the slide in sterling, is beginning to excite buyers who like money-off deals. Ms Barnes said that London property had become 50 per cent cheaper for a Japanese investor and 40 per cent less expensive for a buyer from the eurozone.
Bargain-hunting could mean that the Central London market might start to bottom out towards the end of next year.
--------
Where are all those people on this forum who claimed UK property prices are supported by fundamental like high population density, all those foreigners buying houses etc?
It's clear now even for the dimwitted that rampart house pricing inflation was supported by 125% morgages and other unchecked lending practices.
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