Further house price falls predicted

Published:
09 September 2008
Topic:
News,Money,Mortgages

The price of an average home could plunge by as much as 25% from its peak before the housing market starts to improve, the boss of the UK's biggest building society has said.

Nationwide's Graham Beale told the BBC such a recovery is unlikely to start before 2010. This implies that the recent move to suspend stamp duty on homes worth less than £175,000 would do little to reverse the current downturn in the market.

"I think next year it will be stable but we're going to see further falls in house prices and I think we're going to be into 2010 before we get to the new world, whatever that is."

But the impact of US credit conditions on the UK mortgage market was not felt in all quarters, he argued, as lack of liquidity was not the problem.

He said: "If you're a borrower and you've got a good credit record and you've got a deposit there's massive choice of product. Liquidity is not an issue."

The reason why others were struggling was "nothing to do with liquidity" but to do with a change in lenders' attitude to risk, he contended.

"A lot of lenders that were more aggressive in their lending activity have closed the business in terms of new lending so that's where the void is in the marketplace," he said.

Copyright © PA Business 2008

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