More pessimistic view on house price movement from HBOS
Major high street bank HBOS has changed its prediction in terms of house price movement, taking a more pessimistic view than before, which comes at the same time as news that mortgage lending levels had plummeted. The prediction from HBOS, which operates the Halifax and the Royal Bank of Scotland, came just prior to reports that showed house prices had fallen on an annual basis for the first time since 1996, with house prices now 1% lower than they were this time last year.
Earlier this month the bank predicted that there would be a single digit drop in house prices over the course of this year. Prior to this the bank had predicted that house prices would remain flat over the course of the year. However, officials from HBOS have now stated that they expect to see house prices fall by ‘mid single digits’ over the course of the year. The bank’s Halifax House Price Index fell by 2.5% in March, which was the sharpest decline since the 1990s. This has also coincided with a rise in mortgage interest rates introduced by many banks.
Predictions over how much house prices will fall over the course of the next year or two have varied, and some have predicted falls of around 20% whereas others have predicted falls of 5-10%. House prices have already started to fall, and a recent report indicated that house prices were now 1% lower than they were this time last year. The outlook for the property market does not look good, particularly given the tight credit loans conditions in place, which is affecting consumers affordability and confidence, thus leading to a slump in the housing market.
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