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September 24, 2008

CML abandons house price forecasts


by Gill Montia
CML abandons house price forecasts

The Council of Mortgage Lenders (CML) has described attempts to predict the direction of UK house prices in the short term as “futile”.

The body has admitted that its May forecast of a 7% fall this year is wide of the mark and says it does not expect the market to recover from its current slump before 2010.

One recent headline grabbing prediction came from Nationwide’s chief executive, Graham Beale, who suggested prices might fall by 25% from peak to trough.

Research consultancy, Capital Economics, is even gloomier and expects a peak to trough fall of 35% with recovery towards the end of 2010 or at the start of 2011.

Now the CML has now abandoned attempts to predict house price movements altogether because of the uncertainties that surround the market.

Last week’s events on Wall Street have pushed three-month Libor (the rate at which banks lend to one another) back to December 2007 levels, threatening a rise in mortgage rates.

Meanwhile confidence in the market is at an all-time low, with August sales falling 60% year-on-year, to 62,000.

The figure, which is based on HM Revenue & Customs’ data, is at its lowest since 1959.

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