Thursday, 17 May 2007

What? Only 5 percent appreciation?

Brace yourself for some shocking news - the Nationwide only expects 5 percent housing inflation this year. Does this mean that the days of double digit appreciation are over? It seems so, at least as far as the Nationwide is concerned.

Over the next year or so, we will hear many foolish forecasts like this one presented by the Nationwide. However, no one can bargain with a house price crash. It won't be a matter of settling the difference between zero and 10 percent price growth. Interest rates are on an upward swing, expectations will shift, and the buy-to-let brigade will be caught short. The market has gone mad, but sanity has a habit of prevailing.

So let the Nationwide forecast away. Let them give an empirical veneer to their futile attempts to avoid retribution. The crash coming; yes, it coming, and there nothing anyone can do to stop it.

Britain's housing market will suffer a sharp slowdown during the second half of the year, leading to average annual property price rises this year of as little as 5 per cent, Nationwide, the country's second-biggest mortgage lender, cautioned today.

Graham Beale, the new chief executive, said: "Our forecast for house price growth is 5 per cent to 8 per cent in 2007, reflecting a cooling in the second half of the year as increased interest rates filter through."

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