Capital Economics’ Roger Bootle gives grim forecast for housing market

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by Kay Murchie

Roger Bootle of economic forecasting agency, Capital Economics, is providing a gloomy forecast for the UK housing market.

Speaking at the Chartered Institute of Housing South East’s Annual Conference and Exhibition in Brighton earlier this week, the former chief economist of HSBC is predicting a rise in repossessions and an increase in those entering negative equity.

His figures indicate that approximately 3.5 million households will fall into arrears – double the amount seen in the early 1990s downturn. Meanwhile, Mr Bootle is forecasting that repossessions could hit 90,000 this year.

In comparison, the Council of Mortgage Lenders is predicting repossessions will total around 75,000 for the 2009 year.

Meanwhile, a further fall in house prices is expected with a peak-to-trough fall of between 40-45%.

In related news, the Halifax today reported that house prices fell by 2.3% in February, taking the average UK home to £160,327.

The latest monthly fall takes the annual rate of decline to 17.8%, according to the lender.

With regard to the economic downturn, Mr Bootle believes it is the worst since the economic slump of 1945-48 - after World War II.