Barclays warns of 20% fall in house prices
House prices could fall 20 per cent in the next two years, according to Barclays Bank.
09:28 22 November 2004
Barclays, the fifth largest mortgage lender in the country, is set to warn the City that over the next year house prices could drop eight per cent, and up to 20 per cent by the end of 2006.
Christopher Smallwood, Barclays chief economic adviser, told the Sunday Times newspaper: "People say that house prices can adjust gradually, but I would be very surprised if that happened."
The prediction from Barclays stands at odds with several other predictions, with Nationwide predicting that house prices will hold firm or rise five per cent over the next 12 months.
Current forecasts from the Council of Mortgage Lenders suggest an eight per cent rise in prices over the coming year.
However, there is increasing evidence property values have peaked.
The Royal Institute of Chartered Surveyors (RICS) has said that more of its members are reporting falling prices than at any time since 1992.
"Buyers are still nervous, which is not surprising given the quick-fire interest rate rises over the summer," noted Jeremy Leaf of the RICS.
"But the professionals on the ground believe that confidence will not deteriorate further over the coming months as the underlying factors, jobs and the wider economy, remain stable," he added.