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Nationwide rules out forecast as UK house prices plunge
Nick Goodway6 Jan 2009
Nationwide, Britain's biggest building society, today said house prices crashed by 15.9% in 2008 and refused to predict where they will end up at the end of this year.
“In these turbulent times the uncertainties around all forecasts are greater than usual,” said chief economist Fionnuala Earley. “A forecast subject to frequent change could add to greater uncertainty.
“If the economy goes into deeper recession we should expect to see a slower recovery in the cycle. However, if the economy recovers more swiftly, we may expect a faster turnaround in the housing market.”
She also said the expected cut in interest rates by the Bank of England on Thursday is vital. “Sharp cuts in interest rates will provide support to existing and potential homeowners and pave the way for improvement in affordability which will encourage buyers back into the market.”
Analysts are split as to whether the Bank's monetary policy committee, which starts its two-day meeting tomorrow, will cut rates from their current 2% to 1.5% or a record low of just 1%. Most favour a 0.5% cut.
Nationwide said prices fell 2.5% during December. That brought the average house price down to £153,000 — a level not seen since spring 2005.
In London the average house price fell 15.1% to £257,963 with Westminster the most expensive and weakest borough with prices falling by 22% to an average £513,953.
Howard Archer at IHS Global Insight, who predicts a 15% fall in prices this year, said: “The ongoing deep problems of the housing market maintain pressure on the Bank of England to deliver another deep interest rate cut on Thursday.”
Meanwhile, Knight Frank's measure of prime country houses said prices fell 16% in 2009, with areas on the outskirts of London hard hit. The top end of the market, mansions over £5 million, fared much better than the lower end, country cottages under £500,000, with price falls of 10% and 17% respectively.
Reader views (2)
CRM, essex your wrong about Nationwide, they got dragged into this credit reccesion by this government saying they want banks to loan money. Nationwide did not have anything to do with bring about thi recession or creit crunch. Thye did not deal in the overseas mortgage market which was one of th causes among others. Plus Nationwide policy is and always will be to their savers, who are currently being hit very hard. my mone is with them and I object to my money being loaned out with myself and other savers not earning some interest on it. If Nationwide begin to loan out at rates the governmentwant and yourself and I lose out, Then my money comes out and goes somewhere else. Andif othr savers do the same thing. Then there will be no money to loan to any one. I worked hard for my money and if people dont like my stance. then tough. No interest for me no money for people who want loans. So dont be hard on Nationwide they have people like us to consider as well.
- Adynamo, scunthorpe, 06/01/2009 22:16
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Can't quite see how Nationwide (nor Halifax with their 16% come to that)can come up with these statistics as though it is nothing to do with them. It is these very organisations which are starving the mortgage market by raising deposit thresholds, so that only the few can get a mortgage, so forcing property values down as there is so much property chasing fewer buyers, or am I wrong.
- Crm, essex, 06/01/2009 16:41
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