House prices are set to fall by 10% over the next three years, experts at Citigroup have warned. Sunday Telegraph
The bank’s chief UK economist said property prices were heading for a major downturn, losing 10% of their value or more over the next three years.
'Whether you call it a crash or a slump, this is going to be very painful,” said Michael Saunders. He added that the central banks’ move to inject liquidity into money markets would not 'remove the prospect the economy will slow sharply because of the drag from severe housing weakness, high household debts, rate hikes and the tightening of credit availability'.
Citigroup’s warning is the latest from a major bank on house prices and follows Morgan Stanley’s prediction of 10% price declines. Until recently, few banks forecast significant falls in property values but fresh evidence of a slowdown has seen several forecasters warn of a housing crash.
Saunders said his worries had been compounded by signs that mortgage companies are tightening their lending standards as they pass on the higher cost of borrowing to customers.