UK House Prices Could Fall 30%, Nationwide Warns
One of the UK’s largest mortgage providers has warned that house prices could crater by almost a third under the firm’s worst-case scenario as rate rises and economic uncertainty hit the market.
“My best case is slowly increasing house prices and my worst case is potentially a 30% fall, but those are the two extremes which are tail probabilities,” Chris Rhodes, chief finance officer at Nationwide Building Society, said at a Treasury Committee hearing on the mortgage market Wednesday. “We have a weighted average of 8% to 10%. But it’s really important that everyone recognizes that is not a forecast.”
The wide range of his forecast emphasizes how uncertain the outlook is for UK households facing spiking interest rates and persistent inflation. A report Wednesday from property portal Zoopla predicted a property price fall of as much as 5% next year. Lloyds Banking Group Plc’s base case economic assumption for 2023 now sees house prices falling 7.9%. Its worst-case model assumes a crash of almost 18%.
Others are more sanguine. The chief financial officer of Banco Santander SA told Bloomberg last week that he did not expect significant drops in UK home values in the coming years.
The average value of a home dropped 0.9% to £268,282 ($309,500) in October, the sharpest drop since the start of the Covid-19 pandemic, Nationwide said Tuesday. Prices reached a record high earlier in the year.
