Lenders shrink from house price forecasts

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The Independent Online

Halifax and Nationwide, the lenders whose house price outlook helps to set the benchmark for property sentiment, have both refrained from predicting the evolution of house prices next year.

Halifax said that making a prediction would be inappropriate due to its impending ownership by Lloyds TSB, which has its own view on the evolution of the housing market. Lloyds is buying Halifax's owner, HBOS.

"We will still be issuing the monthly house price index, but a prediction for 2009 would go into the period when we are part of Lloyds banking group, so we do not feel it is appropriate to make one at this time," said a Halifax spokesman.

Nationwide said that market conditions were too unstable to be able to make a reliable forecast. "With the volatility of economic conditions that makes forecasting more difficult than normal and because things are moving so rapidly, we think it would cause confusion to place too much emphasis on a number that could change very fast," said a spokeswoman for Nationwide. "Even if we put out a range of forecasts, the range would be very wide."

Halifax's last prediction towards the middle of 2008 was that house prices would fall by about 20 per cent over the whole of 2008 and 2009. Nationwide had initially predicted a 5 per cent fall in prices for 2008, then in the summer said it was possible they would crash by a number in double digits. The spokeswoman said that at the time of Nationwide's first forecast, the assumption was still that the financial crisis that led to the demise of Northern Rock at the end of 2007 would be relatively shortlived.