David Prosser: Prophets of doom stay quiet this Christmas

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The Independent Online

Outlook: The Christmas period is traditionally the time when City economists and everyone else make their predictions for the following year – on almost anything you care to think of. But what you won't be getting this festive season is a forecast from either one of Britain's biggest mortgage lenders on what house prices might do during 2009.

This year is the first time in a generation that Halifax Bank andNationwide Building Society have refused to proffer a forecast on the housing market for the following year. Their public explanations differ: Halifax says that, as it is now being taken over by Lloyds TSB, which may not want to use its housing data, a forecast this year is not appropriate. Nationwide says the market is so unpredictable it simply does not feel able to offer a prediction on which people might rely.

A third reason, not stated, may be that Halifax and Nationwide feel a certain amount of embarrassment about their forecasts at the end of last year, which suggested 2008 would be a year of flat prices, or at worst very limited declines. It's clear that both lenders – though they were in good company – were far too optimistic about the prospects for the UK housing market.

The most likely reason for their reticence, however, is that both lenders fear a further significant downturn for UK house prices in 2009 and don't want to risk talking the market down by making public their fears of impending doom.

Halifax's chief economist certainly expects prices to keep falling next year, as does Lloyds TSB's boss,Victor Blank, who will soon be his new boss. He forecast a further 10 per cent decline in prices earlier this month.

The lenders are certainly not alone in their anxiety. John Varley, chiefexecutive of Barclays Bank, the owner of the mortgage lender Woolwich, reckons prices will fall by 30 per cent overall, which implies another 15 per cent decline before we reach the bottom of the market.

Mr Varley copped a certain amount of flak for his 30 per cent prediction, with many in the property sector complaining that it wasn't on for one of their own to take on the role of a prophet of doom.

Still, we can't have it both ways. Having criticised banks for not being sufficiently conservative about their trading prospects, taking a pop when they do warn about serious difficulties ahead seems a little unfair.

The question remains, however. Just how bad do Halifax and Nationwide think things are going to get if they're too chicken to tell us what they think?

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