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Lenders cannot predict house prices in 2009

Friday, 26 December 2008 7:06 PM

Nationwide and Halifax are both not providing estimates on house prices for 2009. 

Nationwide claims there are too many variables for a clear prediction to be made, while Halifax is holding off its predictions due to the merger with Lloyds TSB. 

Charlotte Sjoberg at Nationwide said: "There is so much volatility out there it makes a forecast difficult and would lead to confusion." 

A Halifax spokesperson explained it would be "inappropriate" to issue a prediction for 2009 because of the merger of HBOS with Lloyds TSB, as Lloyds TSB's head has already provided his estimates. 

However, the monthly Halifax house price index will continue to be released. 

Nationwide will also provide monthly reports into the housing market, which Ms Sjoberg saying these would be more useful. 

"Setting house price forecasts is not as straight forward as it was. There are number of factors including affordability, mortgage lending figures, employment, inflation, and what is happening in the US." 

This week the head of Barclays predicted a total 30 per cent drop in house prices from the top of the market to the bottom. 

John Varley told Sky News: "Our view was that from the top to the bottom, you would see a fall of something like 25 to 30 per cent. 

"I suspect we're about halfway through that at the moment." 

Capital Economics meanwhile forecasts house prices to fall 20 per cent over 2009 - and a 35 per cent total fall in prices from the top of the market in 2007. 

Howard Archer at Global Insight predicts house price falls of 15 per cent in 2009 after the 18 per cent drop in 2008. 

From the August 2007 peak of £199,612, this would put house prices at £137,423 at the end of 2009. 

He also forecast five per cent drop in early 2010 taking average prices down to £130,551. 

There are claims lenders are not wanting to publish house price estimates for fear of spooking consumers. 

It is feared if buyers sense house prices will fall further they will be more likely not to buy, and so cause the property downturn to last longer. 

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