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House prices fell almost 16% in 2008: Nationwide

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Wednesday 7 January 2009

Writes Seamour Rathore
seamour.rathore@consumerchoices.co.uk

Your house is now longer a cash cow, but a depreciating asset which could continue to fall in value.

House prices fell 15.9% last year according to Nationwide (www.nationwide.co.uk), and could fall a similar amount again in 2009. Figures complied by Halifax (www.halifax.co.uk) suggested that house prices fell a simliar level of 16.2% in 2008.

Nationwide and Halifax say, however, they will not predict house price movements in 2009.

Liberal Democrat Shadow Chancellor, Vince Cable, wasn't so backwards in making a prediction, he said: "House prices have now fallen nearly 20% from their peak and may well have just as far to fall again."

Fionnuala Earley, Nationwide’s chief economist said of house prices: “Three main factors have been behind the sharp fall in price: credit conditions, expectations and affordability.

“In these unsettled times a forecast could subject to frequent change could itself add to greater uncertainty.”

The housing market may remain in the doldrums due to banks’ tighter lending criteria as well as public sentiment.

“With job security and income growth less certain, households are likely to be less willing to take on more debt,” added Nationwide’s Earley.

The Bank of England monetary policy committee next meets tomorrow (8 January). Many analysts expect the base rate – currently 2% – to be cut again. Analyst predictions range from 0.5% to 0.75%.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “Many people will be poised to enter the housing market when they believe prices are bottoming out. The availability of fairly priced mortgage deals will be the deciding factor in whether the market will start moving again, however.

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