House prices will fall by 7.9 per cent next year and then will effectively stagnate until 2027 according to a gloomy forecast from the Lloyds Banking Group, which owns the Halifax.
The company is the UK’s largest mortgage lender and has set aside £668m to cover bad debts which it anticipates as rising interest rates make loans and mortgages less affordable.
Although the firm has announced pre-tax profits of £1.5 billion in the third quarter of the year, this remains 25 per cent down on the same period last year.
The group is hinting that it is already being more selective on its lending criteria. "So far at least, our customers are proving to be resilient and adapting well to the cost-of-living increases that we have seen” says Lloyds’ chief financial officer, William Chalmers.
But he continues: "We are deliberately ensuring that we lend to customers who are best placed to withstand potential future stresses on the macro level and in their own personal circumstances."
The 7.9 per cent house price fall is the likely-case scenario put forward by Lloyds - it’s worst-case scenario sees house prices falling overall by approaching 18.0 per cent. And the banking group says the UK economy as a whole will shrink by 1.0 per cent next year according to its likely-case analysis - the worst case is a huge 4.5 per cent shrinkage.
Lloyds attributed its profits fall to the deteriorating economic outlook with inflation hitting at 40-year high in October, although it said it was only seeing “very modest evidence of deterioration” in its credit performance at present.
“The current environment is concerning for many people and we are committed to maintaining support for our customers” chief executive Charlie Nunn told shareholders in a trading statement.
Few of the major estate agencies and property analysts have yet released their forecasts for 2023’s housing market.
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Sounds reasonable, near me not much is coming on… and what is, is staying on. A few properties which were STC a few months ago ( pre Liz 😂) have clearly fallen through, and they are back on… at a lower price. All change I guess.
The moment mortgage rates stabilise then they will be back up at the lower end of the market. Mid range and top end £1mill houses will be affected
I agree Jahan, even it rates rise next week. This is only about confidence, which of course was spectacularly vaporised by the Truss/Kwarteng sh*t show. Gilts are already coming down, gas prices too, we are at the peak if not slightly over the peak of this inflation spike, so rates will start to correlate more closely with the base rate as all this happens and Mr Sunak/Hunt show better management of macro econonics. The safety net for the housing market is still very high employment, wages rising, low supply, huge demand, not a usual recipe for a crash.
That would be convenient Lloyds wouldn't it? The same Lloyds that wants to become the biggest landlord in the UK who would stand to make about £1.2 billion if house prices did drop by 8%? (google lloyds wants to buy 50,000 homes)
Talk prices down and convince a few 1000 landlords to sell up as the next 5 years is going to be rubbish as well?
If you hear this being discussed down the pub, tell them it's a load of old self interested twaddle. Keep calm and carry on is the order of the day.
Exactly!
Lot of scare mongering these days , lots
All designed to scare the populace into making rash decisions that will affect their livelihoods negatively
It will be interesting to see what the sold prices over the last few months look like when Land Registry eventually publish them.
I did a bit of remortgaging around Easter and valuers were very squeamish about asking prices of neighbouring properties. Remortgage valuations were between £25K and £50K below asking prices of similar properties.
My son finally completed on a purchase last week that was listed for sale last December. He offered nearly £20K below asking price in February and it took nearly 8 months to complete.
Look at sage as an example
2 doctors and 8 behavioural psychologists
If that doesn’t ring any alarm bells nothing will
A load of hokum.
They dont know the future. Scaremongering at it's best trying to create a more inviting market for themselves to Hoover up cheap properties.
A good deal of truth in the comments about Lloyds having an interest in talking down the markets. I think the reality is that no-one knows, and almost everyone can take the evidence that suits them and put an advantageous (for them) spin on it.
I seem to recall Covid was going to lead to a property price crash according to some. Remind me - what happened there.....?
Kieth, my friend I’ll tell what happen we were faced with a terrible pandemic taking the lives of 208’000. People in this Country and the potential to take many more if such swift action wasn’t taken by Government rip all and god bless their families.
Private Landlords helped & supported millions of Renter’s with moral support and took a huge financial hit, of course we had an unnecessary eviction ban as we weren’t going to get rid of anyone under the circumstances.
We didn’t have a property crash because people had Mortgage’s for 1.25% or maybe less, ask me again next year.
The squeeze is on us by every means possible by S24, the outrageous While Paper & removal of S.21.
All to make way for and favour the big boys Building Flats like billieo, and are allowed to keep fixed term Contracts. Let me see now who are the new big boys John Lewis 10’000 flats hope to expand to 50’000 flats and get 40% of their future income from Residential, Marks & Spencer add 10 storey Block in Hammersmith 400 rooms for students. Barclays Bank to convert former Banks to flats & £1b fund. Lloyds Bank owners of Halifax to convert Banks to flats. L & G £2b fund for building housing and they call it levelling up but I call it what it is, taking over. Pension funds putting in billions. Avivia insurance moving out 900 staff to convert Office to flats. Do you still think there is no connection between all those new comers taking over and the savage relentless attack on private landlords ?, maybe I wouldn’t be much good at cludo.
Great comment Michael.
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